The One Big Beautiful Bill Act and the Future of Green Energy Tax Credits: What it Means for Business Owners, Investors, and High-Earners in Maryland, D.C., and Virginia

Key Takeaways:

• The One Big Beautiful Bill Act (OBBBA) makes sweeping changes to the Inflation Reduction Act's (IRA) green energy subsidies, affecting eligibility, credit amounts, and compliance.

• Businesses and individuals relying on energy-related tax credits—such as for EV purchases or commercial solar installations—could face reduced benefits or increased regulatory scrutiny.

• Estate planners, partnerships, and S-Corps should review energy-related investments and depreciation strategies in light of OBBBA's revisions and tax planning strategies.

• Compliance obligations under OBBBA will require more documentation and likely affect the timeline and process for claiming energy investment tax credits (ITCs).

• Given the changes, strategic tax and business planning is critical to ensuring ongoing eligibility and avoiding unexpected liability.

Understanding the Legislation: OBBBA Changes the Equation

The Inflation Reduction Act (IRA) of 2022 introduced one of the largest federal investments in green energy in U.S. history—offering generous tax credits for solar panels, electric vehicles, energy-efficient buildings, and more. For business owners and high-net-worth individuals in the DMV (District of Columbia, Maryland, and Virginia), these incentives presented significant opportunities. Many of our clients took advantage of these credits to lower tax burdens or offset investment costs in real estate developments, vehicle fleets, and sustainable business upgrades.

Now, the One Big Beautiful Bill Act (OBBBA) is on the scene. This new legislation curtails some of those incentives, narrows eligibility, and introduces more compliance checks.

Let's unpack what's inside OBBBA and what it means for taxpayers with an eye on green investment strategy.

1. Narrower Eligibility for Green Energy Incentives

Under the original Inflation Reduction Act, businesses and individuals could claim tax credits for a wide array of energy-efficient purchases and improvements. These included:

• Up to $7,500 for the purchase of qualifying electric vehicles (EVs)

• 30% Investment Tax Credit (ITC) for solar and other renewable energy systems

• Tax deductions for energy-efficient commercial building upgrades

• Bonus credits for projects located in low-income or energy-impacted communities

OBBBA limits or eliminates some of these provisions. In particular, it redirects or restricts bonus credits tied to geographic location, income thresholds, or labor requirements.

For example, a commercial real estate developer in Washington, D.C. may have previously qualified for bonus ITCs due to location in a designated low-income census tract. Under OBBBA, those bonus allocations are now capped, and newly introduced eligibility audits could retroactively disqualify some projects.

Example: A Virginia-based family office that planned to install solar across multiple commercial assets may now need to recalculate ROI and adjust tax strategy if bonus credits are no longer available or capped per project.

2. Enhanced Compliance Requirements for Claiming Credits

Another major shift in the OBBBA is the increased scrutiny around how credits are claimed and proven. Businesses, partnerships, and individuals will face new documentation standards, and the IRS is tasked with establishing clearer—but stricter—guidance.

This means:

• Greater need for third-party verification of project components

• Enhanced record-keeping obligations, particularly for partnerships or S-Corps

• Revised timelines for filing amended returns or claiming credits retroactively

For small to mid-size LLCs looking to claim clean energy tax benefits, these procedural hurdles could be burdensome. Structuring your business to document compliance from the start is now a practical imperative—not an afterthought.

Example: An S-Corp in Maryland installing energy-efficient HVAC systems in multiple office locations may now be required to submit engineering certifications—not just receipts—to substantiate the energy efficiency improvements required for deduction eligibility.

3. Implications for Partnerships and Pass-Through Entities

Partnerships and pass-through entities have historically had opportunities to distribute green energy tax benefits among partners or members. But OBBBA introduces allocation limits and strengthens the IRS's authority to recharacterize certain transactions, particularly when credits are transferred.

Key here is the potential impact on:

• Syndicated credit deals

• Real estate partnerships with layered ownership

• Family LLCs and trusts involved in green energy investments

If your business model includes distributing or transferring tax credits among members or entities, those transactions may now trigger audit flags or even disqualification. Tax strategy that was sound under the IRA may no longer hold up.

Example: A D.C.-based law firm structured as a partnership enters into a joint solar array purchase with related partnerships. Under OBBBA revisions, sharing investment tax credits among otherwise related partners is closely scrutinized, and improper structuring could void deduction benefits.

4. Estate Planning Considerations: Rethinking Green Strategies

Estate planning involving energy investments—especially when valuable tax benefits were anticipated—must now be revisited.

Trusts and estates holding renewable energy assets could see a reduction in projected credit value. Moreover, if credits are tied to personal or active use requirements that heirs or successors can't meet, those benefits could go unrealized or worse—trigger unexpected tax burdens.

Strategically, high-net-worth clients in Virginia, Maryland and D.C. may consider:

• Adjusting asset-holding structures to reflect compliance needs

• Updating trust provisions to account for location- or entity-based credit limits

• Rebalancing portfolios away from overconcentration in energy-based tax shelters

Example: A Maryland family trust holds multiple limited partnership interests in solar installations. If those projects become ineligible for bonus credits under new OBBBA rules, and basis recovery becomes unreliable, significant estate valuation issues may emerge down the line.

5. Strategic Risk Management Going Forward

The OBBBA has not eliminated green energy tax credits—it has just made them harder to claim. For sophisticated business owners in the DMV who are investing in these areas, there's still value to be found. But the key is compliance and risk mitigation.

Here are some key steps to consider:

• Reassess tax credit assumptions in pending or future pro formas

• Conduct legal review of past credit claims for potential audit exposure

• Focus on real-time compliance documentation—especially around EVs, building efficiency, and labor wage requirements

• Consider structuring credits with independent project certification to limit IRS disputes

For businesses pursuing ESG (Environmental, Social & Governance) goals, the signal from Congress is clear: incentives are there, but you need to show your work.

Example: A commercial property manager in Northern Virginia installing building automation and solar features as part of LEED optimization should ensure that each component is independently certified and properly documented to survive future IRS scrutiny under OBBBA enforcement frameworks.

Unique Insight: Economic Policy by Proxy

At a deeper level, OBBBA reflects a shift away from open-ended federal energy subsidies toward a more curated approach. Only the most compliant and well-documented projects will receive funding. This has the effect—whether intended or not—of narrowing the field to larger or more resource-rich entities, leaving smaller players behind.

From a legal strategy perspective, this means that businesses and estate planners need to start viewing green energy investments not just through an environmental lens, but as areas of elevated compliance risk.

The return-on-investment calculations that made perfect sense under the IRA should be revisited under OBBBA, especially if these credits were central to tax strategy over the coming decade.

What Should You Do Now?

If you're a business owner, investor, family office, or professional in Maryland, Virginia, or the District of Columbia relying on energy-related tax credits—or planning to invest in vehicles, buildings, or renewable energy projects—now is the time for a legal review.

OBBBA changes both the numbers and the rules.

Some proactive steps to consider:

• Schedule a full review of any planned or past IRA-linked tax credit claims.

• Re-evaluate energy investments in light of new bonus credit criteria.

• Ensure documentation standards meet OBBBA expectations.

• Loop in tax, legal, and estate professionals early when planning investments or asset transfers.

Especially for clients managing multiple entities, pass-through structures, or complex holdings, coordinating compliance across entities is essential. Tax savings are still possible—but so is audit risk, clawback, or worse, if the strategy doesn't align with OBBBA's framework.

Need Help Navigating the Changes?

At Thienel Law, we help clients navigate the evolving intersection of tax incentives, business operations, and long-term financial strategy. Whether you're expanding your green footprint, managing estate assets, or restructuring your business in light of legislative changes, we can help craft a solution that's legally grounded, tax efficient, and strategically sound.

If you're unsure how this applies to your business or personal situation, we're here to help. Schedule a consultation with Steve Thienel to get advice tailored to your goals.

Contact us at Thienel Law to protect your investments and keep your tax strategy on course.