What changed — and why it matters for trucking
The Internal Revenue Service issued Notice 2025-42 on August 15, 2025, narrowing how wind and solar developers can prove they’ve “begun construction” to qualify for clean electricity tax credits. The rule eliminates the long‑used “5% safe harbor” pathway for wind and most solar projects, leaving the facts‑and‑circumstances “Physical Work Test” as the primary route. A narrow carve‑out keeps the 5% option only for “low output” solar projects at or below 1.5 MW AC. For fleets planning on-site generation at large depots or truck stops, that threshold is small—heavy‑duty charging can require multiple megawatts—so the change increases schedule and financing risk for bigger installations.
The IRS guidance ties directly to deadlines in the “One Big Beautiful Bill Act” (OBBBA). To avoid the credits’ termination for wind and solar, projects generally must begin construction by July 5, 2026. The new guidance also outlines a continuity safe harbor: projects placed in service within four calendar years of their construction start are deemed to satisfy the continuous construction requirement. Advisory firms note additional placed‑in‑service timing rules under OBBBA that can extend to 2030 for certain projects that start construction before the July 2026 deadline, while those starting later face a shorter runway. For fleet energy planners, that means timelines are tighter and slippage could be costly.
The lawsuit: who’s suing and what they argue
On December 18, 2025, a coalition led by the Oregon Environmental Council filed suit in the U.S. District Court for the District of Columbia against the IRS and Treasury. Plaintiffs include NRDC, Public Citizen, Hopi Utilities Corporation, Woven Energy, the City and County of San Francisco, and the Maryland Office of People’s Counsel. Their complaint claims the August guidance illegally singles out wind and solar—unlike other technologies—for stricter treatment, is “arbitrary and capricious,” and will raise power prices for consumers. They’re asking the court to set the rules aside and restore the prior, decade‑old framework.
What this could mean for owner‑operators and fleet managers
- Depot charging economics: If tax credit eligibility becomes harder to lock in, developers and EPCs may demand higher prices or stricter milestones, which can flow through to PPA rates or lease pricing for on‑site solar plus storage at fleet depots. For sites above 1.5 MW AC, the 5% safe harbor is gone, increasing reliance on physical construction milestones that are vulnerable to interconnection and equipment delays.
- Utility bills and surcharges: Industry and advocacy groups argue the rules will slow new generation, tightening supply and putting upward pressure on retail electricity rates—costs that can show up in depot energy spend or in contracted charging at public hubs.
- Project timing risk: Under the IRS continuity safe harbor, developers need projects online within four calendar years of starting construction to get a clear compliance presumption. Missed milestones could jeopardize credit eligibility, raising the risk premium embedded in fleet‑site energy deals.
- Small sites vs. megawatt hubs: The 1.5 MW AC carve‑out preserves the 5% path for smaller solar (think light‑duty fleet yards or rooftop arrays), but most heavy‑duty charging hubs will exceed that. Expect developers to push for earlier ground‑breaking and stricter “binding contract” provisions to clear the Physical Work Test.
Action steps for fleets
- Pressure‑test schedules: Ask your developer how they plan to satisfy the Physical Work Test and the four‑year continuity safe harbor; request contingency plans for interconnection delays and transformer lead times.
- Right‑size early phases: If your first phase can fit under 1.5 MW AC, you may preserve the 5% safe harbor on that tranche while planning larger follow‑ons with physical work milestones.
- Lock in terms: Revisit PPA and lease language for change‑in‑law, milestone, and force‑majeure clauses tied to tax credit qualification and placed‑in‑service dates noted by tax advisers.
- Watch the docket: A court ruling that restores the prior rules would ease financing and scheduling pressure for larger on‑site projects. Until then, plan under the current guidance.
Bottom line
The IRS’s August 15 guidance tightens the path to federal wind and solar credits just as fleets are evaluating megawatt‑scale charging and on‑site generation. The December lawsuit seeks to roll those rules back. Until the court acts, assume projects must meet the Physical Work Test (with a small‑solar carve‑out) and hit tighter deadlines. For trucking, that translates into earlier shovels in the ground, stricter contracts, and more emphasis on schedule discipline to keep depot charging costs predictable.
Sources Consulted: CleanTechnica; Internal Revenue Service (Internal Revenue Bulletin 2025‑36, Notice 2025‑42); EY Tax News; Reuters.
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
