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ARTICLE · 25 AUGUST 2025

Termination Effectiveness Beginning (Of Construction): Notice 2025-42

Holland & Hart LLP
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In response to Executive Order 14315 (July 7, 2025) (the "July 7 EO"), the IRS released Notice 2025-42 on August 15, 2025. Notice 2025-42 provides rules on how to begin construction for purposes of the effective dates...

United StatesReal Estate and Construction
Adam M. Cohen
Adam M. Cohen
Melissa Braun
Melissa Braun

In response to Executive Order 14315 (July 7, 2025) (the "July 7 EO"), the IRS released Notice 2025-42 on August 15, 2025. Notice 2025-42 provides rules on how to begin construction for purposes of the effective dates of the provisions terminating the investment tax credit (ITC) and production tax credit (PTC) under the tech-neutral provisions of Sections 45Y and 48E of the Internal Revenue Code. The new Notice is effective if a project has not begun construction under the pre-existing rules by September 2, 2025.

Under Public Law No. 119-21, commonly known as the One Big Beautiful Bill Act ("O3BA"), the ITC and PTC under Section 45Y and 48E terminate for wind and solar projects that begin construction after July 4, 2026 and are placed in service after December 31, 2027. Projects that begin construction before July 5, 2026 must still satisfy a continuity requirement, but can be placed in service after December 31, 2027.

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