The Impact of the ‘One Big Beautiful Bill Act’ on Nuclear Tax Incentives

The One Big Beautiful Bill Act alters the landscape of nuclear energy tax incentives, with significant implications for nuclear developers, investors, and stakeholders. This LawFlash breaks down how the bill may affect financing strategy and compliance planning for the nuclear industry.

Tax incentives available to the nuclear industry fared relatively well in the One Big Beautiful Bill Act signed into law by President Donald Trump on July 4, 2025. Though the bill significantly impacts the future of renewable energy tax incentives enacted and extended by the Inflation Reduction Act of 2022 (the IRA), which we discuss in detail in our broader Lawflash about the bill, nuclear avoided the most impactful cuts.

Earlier versions of the bill threatened a more significant scaling back of the IRA-era tax incentives available to the nuclear industry. For example, the draft passed in the US House of Representatives on May 22, 2025 provided for a highly accelerated sunsetting of nuclear-related tax credits and the sale thereof. Furthermore, the version released by the US Senate Finance Committee on June 16, 2025 denied production tax credits available to the existing nuclear fleet if they used nuclear fuel imported from Russia or China.

While these steeper cuts and additional limitations were removed in the final version of the bill, there are important new opportunities, limitations, and changes to nuclear industry-related tax incentives to be aware of, which we describe below.

WHAT ‘SURVIVED’

• The zero-emission nuclear power production credit under Section 45U (the Nuclear PTC), which we discussed in more detail in a previous LawFlash, was mostly left unchanged by the bill. However, the Nuclear PTC is now subject, along with most other surviving IRA-era tax credits, to broad “foreign entity of concern” (FEOC) rules, discussed briefly below. The Nuclear PTC is not, however, subject to the much broader “effective control” and “material assistance” provisions under the FEOC rules.
• The technology-neutral clean electricity production and investment tax credits under Code Sections 45Y and 48E (the Clean Electricity PTC and ITC), respectively, remain generally available to new nuclear facilities that “begin construction” prior to 2034 before phasing out over three years. The bill also added a new 10% “adder” for nuclear facilities that are located in “nuclear energy communities.” The Clean Electricity PTC and ITC are, however, now subject to the broad FEOC rules discussed below.
• The ability to sell IRA-era tax credits under Code Section 6418 was left mostly untouched, as the bill focused on changes to the underlying tax credits themselves rather than the transferability thereof. However, the bill did add a prohibition on transferring credits to “specified foreign entities.”

WHAT CHANGED

Opportunities

• The bill added a new bonus credit incentive, or “adder,” with respect to the Clean Electricity PTC under Code Section 45Y for “advanced nuclear facilities” located in “nuclear energy communities.” Qualification for the nuclear energy community adder increases a facility’s otherwise applicable PTC rate by 10% (or two percentage points if the facility does not satisfy a separate prevailing wage and apprenticeship standard). The adder for advanced nuclear facilities is not available to the Clean Electricity ITC.
• For these purposes:
  • A “nuclear energy community” is any metropolitan statistical area (MSA) that has, or any time since 2010 has had, 0.17% direct employment related to the advancement of nuclear power, including through a number of proscribed industries, such as advanced nuclear facilities, advanced nuclear power research and development (R&D), and the manufacture or assembly of advanced nuclear facility components. It is anticipated that the Internal Revenue Service and the US Department of Energy will release an approved list of nuclear energy communities, as they have done for other “energy community” designations.
  • An “advanced nuclear facility” is defined as any nuclear facility the reactor design for which was or is approved by the NRC after 1993 as described in Code Section 45J(d)(2) (a standalone tax credit available for energy production from advanced nuclear power facilities). However, this designation appears to be available beyond just “advanced nuclear facilities” because it is deemed satisfied if the NRC authorizes construction by issuing a site-specific construction permit or combined license with respect to a nuclear facility, regardless of when the design of such facility was approved.
• The bill allows companies that generate electricity from “advanced nuclear facilities” (as discussed above, without the exception noted for NRC-authorized construction) to be structured as master limited partnerships (MLP) starting in 2026. The shares of an MLP are publicly traded, but it faces only one level of federal income tax.

Pitfalls

• Under prior law, the Clean Electricity PTC and ITC were set to begin sunsetting starting the later-of (1) 2034 and (2) two years following the calendar year in which annual US greenhouse gas emissions from electricity production dropped by 75% as compared to 2022. The bill removed the second prong, such that the Clean Electricity PTC and ITC begin to sunset in 2034.
• The bill added an FEOC regime as a restriction on claiming most IRA-era tax credits, including the Nuclear PTC and the Clean Electricity PTC and ITC. These include both project- and company-level restrictions.
• A fulsome discussion of the new FEOC regime is beyond the scope of this LawFlash. At a (very) high level:
  • “Specified foreign entities” (SFEs)—which are very generally a wide range of persons and entities with ties to China, Russia, North Korea, or Iran—are ineligible to claim both to the Nuclear PTC and the Clean Electricity PTC and ITC. Furthermore, taxpayers not compliant with certain ownership or control restrictions with respect to SFEs are deemed “foreign influenced entities” (FIEs) and are also denied such credits. However, the more onerous “effective control” provisions of these rules do not apply to the Nuclear PTC.
  • Qualified facilities that receive “material assistance” from SFEs and FIEs are ineligible to receive the Clean Electricity PTC and ITC. Material assistance is determined using a cost-based formula measuring the portion of direct project or component costs that is sourced from SFEs and FIEs. The “material assistance” threshold increases over time, effectively applying greater limitations on SFE- and FIE-sourced components for projects that begin construction in successive years.
• Nuclear facilities hoping to utilize the Nuclear PTC or Clean Electricity PTC and ITC will need to navigate these FEOC rules carefully to ensure they are eligible for the tax credits. This will involve a focus on both taxpayer-level and project-level ownership and capitalization, as well as project-level sourcing, contracting, and documentation.
• Complicated transition rules apply to the new FEOC provisions. However, new nuclear projects are unlikely to be able to take advantage of any grandfathering given how quickly the new FEOC rules become fully effective (mostly by 2026).

WHAT TO KEEP AN EYE ON

• As noted above, the sunsetting of the Clean Electricity PTC and ITC depends on when a project “begins construction.” Guidance relating to when a project has “begun construction” has played a large role in the renewable energy industry for more than a decade, as such standards have dictated various tax credit deadlines and grandfathering rules.
• Such “begun construction” guidance is likely to be impacted by the July 7, 2025 executive order issued by President Trump (the EO), which directs the secretary of the US Department of the Treasury to take action, within 45 days, “to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities.”
• The EO goes on to state that such efforts are to include “issuing new and revised guidance as the Secretary of the Treasury deems appropriate and consistent with applicable law to ensure that policies concerning the “beginning of construction” are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
• Though the EO focuses on the application of the begun construction guidance to the wind and solar industries, it is unclear whether such a narrow focus of the EO will mean that a different “begun construction” standard will apply to other technologies. New guidance could be released as soon as mid-August.

STAY INFORMED

Visit our US Administration Policies and Priorities resource center and subscribe to our mailing list for the latest on programming, guidance, and current legal and business developments.