Energy Credit Transfers Will Stay Dynamic Under Trump Tax Law

The Trump administration’s massive tax package contains changes to the renewable energy credit framework and downward drivers to corporate taxable income—both pivotal factors for the tax credit transfer market.

While the $3.4 trillion tax law maintains transferability of renewable energy tax credits for the foreseeable future, the credit transfer market will remain dynamic as large corporations reassess credit needs and developers evaluate credit-worthy activities as everyone adapts to the new legislation.

The impact of this legislation is significant as it cements Tax Credit purchasing as an indefinite fixture of Corporate Tax planning while shifting the mix of renewable energy technologies qualifying for the tax credits.

Since its inception in 2023 by the Inflation Reduction Act, transferability has helped developers sell their renewable energy income tax credits at a discount to corporations with federal income tax liabilities. Market-driven credit discounts typically have produced $5 million to $8 million of cash tax savings for every $100 million of credits purchased.

However, the transfer market has been no stranger to typical supply and demand forces. As more corporate entities enter the arket to reduce cash taxes through transferability, diminished supply drives down discount rates, reducing the net benefit for credit buyers.

US corporates are risk averse buyers, who must be certain the credits they purchase can be utilized immediately. Demand is therefore hinged to legislative clarity and line of sight to tax liability. The Trump tax bill solved both of these variables.

The corporate tax cycle dictates the seasonal-nature of tax credit demand. For instance, as corporations finalized their 2024 tax liability in early-2025, a large influx of demand for 2024 credits entered the market, driving discount rates down 1 to 3 percentage points.

Conversely, mature buyers transacting nine months earlier enjoyed higher discount rates when corporate demand was tepid. The certainty provided by the new tax law has created a red hot 2025 market. Supply for credits using growing alternative technologies is rising as the new law targets wind and solar technologies.

Wind components no longer will be eligible for tax code Section 45X advanced manufacturing production tax credit after 2027. And both wind and solar technologies no longer will be eligible for the Section 45Y production tax credit and Section 48E investment tax credit if construction begins after July 4, 2026, and the facilities aren’t in service before 2028.

Tax credits are a material portion of the project capital stack and investment will follow projects with viable tax credits. Unless interim legislation revives credit applicability for Wind and Solar, investment will flow to other technologies. Tax credit buyers should expect ample credit supply, but that supply will likely not be from wind and solar projects after 2027.

Although traditional wind and solar tax credits have historically had the most transaction volume, demand for alternative technologies has risen. This demand was almost 50% of overall credit demand in the first half of 2025, compared to the first half of 2024 where they had less than a quarter of the market.

Developers must adapt to other technologies given the wind and solar phaseouts, but they can remain hopeful that the market has welcomed other alternative technologies.

The Trump administration’s friendly approach toward these alternative technologies will foster ample supply on the market. Section 48E and Section 45Y will be available for all non-wind and solar technologies through 2036, further encouraging energy storage and renewable gas facilities.

The Section 45X production tax credit will retain its 2033 termination date for all non-wind components, which has seen a steady increase in supply since 2024. Section 45Z received an extension and is now transferable through 2029. All indications point to a continued growth in production tax credit supply, replacing any diminished supply from the solar and wind sector.

Some of the new tax law’s provisions will take effect immediately and help to shift the transfer market. Corporations can now immediately deduct domestic research and experimentation expenditures and can expense previously unamortized amounts.

Certain manufacturers also can expense 100% of newly constructed domestic factories the year that they’re placed in service. And 100% bonus deprecation is available for assets placed in service after Jan. 19, 2025.

Calculations on interest expense limits now exclude depreciation, and this can exponentially drop tax liability across the board for the 2025 tax year. Lower taxable income will lead to lower tax credit demand as corporations won’t need as many credits offset a lower tax bill.

The immediate increase in corporate deductibility is likely to drive away some traditional tax credit buyers and slow the number of market entrants. But the corporate alternative minimum tax’s survival, and a mix of favorable and unfavorable changes to international-related provisions, will leave many large corporations with tax liability for 2025 and beyond.

Alternatively, corporations can elect in or out of various immediate expensing provisions, allowing them to pull levers and have a portion of tax liability be absorbed through tax credit purchases, yielding net tax cash benefits through discount rates.

While transferability survived, the new law’s effect on the supply-and-demand construct of the transfer market has changed. Supply of quality, low-risk tax credits from credit worthy sellers will grow, and federal income tax will dive lower, potentially creating a buyer’s market.

In this new world, discount rates on tax credit purchases may expand, driving more cash tax savings for US taxpayers who make the smart decision to participate.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Ian Boccaccio is a principal and income tax practice leader at Ryan LLC in New York focused on green energy investing and tax credit transfer monetization.

Dane Ware is a CPA and senior tax consultant for Ryan LLC.

Write for Us: Author Guidelines