Update #2: Green Tax Credits Including 25C Targeted in Debt Ceiling Fight

Update 2:

The House passed debt ceiling bill did not include repeal of the green energy tax credits including Section 25C, Section 179D, or Section 45L. While the bill did rescind some IRS funding from the Inflation Reduction Act, it did not affect the home rebate programs created by the legislation. Unfortunately, the bill did rescind any unobligated funding from the third round of ESSER, however, because most of the money was already passed on to the states, this legislation should not affect the money available from schools, just unspent money for administering the program at the federal Department of Education.

Update:

House Republicans have released the legislative text of the Limit, Save, and Grow Act of 2023 which returns Section 25C tax credit for HVAC improvements, 179D commercial building tax deduction, and extension of 25D and 45L to their pre-Inflation Reduction Act versions. The legislation also repeals funding for the state homes rebate programs for energy efficiency improvements and heat pump rebate programs. This would reduce the value of 25C and 179D provisions, allow 25D to expire at the end of 2023, revert 45L to its expiration at the end of 2022, and prevent federal funding for the implementation of state rebate programs.

This is House Republicans' initial pitch to negotiate on the debt ceiling increase, and these provisions could be included in a final version.

A copy of the legislative text is here, section-by-section summary, and one-page summary here.

Original Post:

Late last week, House Republicans released their initial list of demands in their negotiations to lift the debt limit before the deadline this summer. One of the demands to pay for lifting the debt ceiling is the repeal of the “green tax credits” included in last year’s Inflation Reduction Act (IRA). Even though 25C and other efficiency credits like 179D and 45L are pre-existing tax credits or deductions, they were expanded by IRA. House leadership plans to vote on this plan by the end of April. It is important to note that this is the first salvo in a very large fight over spending and the debt that will be the priority of House Republicans through the end of the fiscal year.

The White House has urged Congress to lift the debt ceiling in a “clean” fashion, meaning no extra requirements such as reducing future spending. House Speaker Kevin McCarthy also spoke to CEOs and Wall Street executives this morning, urging them to put pressure on the White House to come to the negotiating table. The full list of demands to be included in the House Republican package from Punchbowl News:

While this package is very likely to pass the House, it is almost certainly not going to pass through the Senate or be signed by the President. The Treasury Department expects the US to need to lift the debt ceiling by early Summer to prevent default on its obligations.