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Reconciliation: An Overview

By June 5, 2025June 9th, 2025No Comments

June 5, 2025

Also known as the Tax Reform Package (or “The One Big Beautiful Bill” in recent media), reconciliation is a specific legislative process used to quickly pass certain types of bills related to taxes, spending, and the debt limit. This process allows the Senate to pass legislation with a simple majority of 51 votes, bypassing the filibuster, which requires 60 votes. For example, the Inflation Reduction Act is a reconciliation package. 

It is notable that reconciliation is different from the FY26 Appropriations Budget. Yearly, the President’s preferred Appropriations Budget is released to Congress in March. This year, the Trump Administration released their FY26 budget proposal on May 2, known as a “skinny budget.” Additionally, each year, in March, April and May, House and Senate members solicit priorities from their constituents to inform their versions of the upcoming year’s federal budget. The Appropriations Committees then take those priorities and create their versions of the budget, which are typically released over the summer, and in theory, voted on and passed by September 30th of every year. The FY26 Budget should, in theory, be passed by Sept. 30th, 2025. The timeline for 2025 will likely look different than that typical schedule, but the need for advocacy on priorities during the summer will remain. This budget is still being drafted, which means now is the best time to bring your concerns to members of Congress. Here is a list of letters we sent to Members of Congress about regional FY26 priorities in April 2025:

Projected Reconciliation

On May 12th, House Republicans unveiled their tax reform package through the Ways and Means committee before the committee released the full text of the legislation and a section-by-section summary of the bill. As of May 22nd, the House has approved the package and the bill has moved to the Senate. As Republican leadership has garnered enough support to pass the bill, it awaits a vote on the Senate floor before going to the President’s desk for a signature. Leaders have indicated July 4th as a goal deadline for passage. Throughout this process, there are opportunities to influence the language by being in touch with your members of Congress. And over the next two months, this language will be paramount. 

Although this legislation is lengthy, key concerns and cuts have been identified and summarized by folks like the Washington Post. You can read their article here that includes information on cuts to Medicaid, SNAP, the border wall, taxes on higher education, defense spending, student loan forgiveness, tax credits, the debt ceiling, and more. As for ReImagine Appalachia, we have identified a few programs that we featured in our Grant of the Month Club that are under threat. These programs are specially tailored for Appalachia and other energy communities to create jobs, clean up lands, and diversify our economy. 

Further parsing of the legislation and analyzation of the text has been spearheaded by the folks at Evergreen Action, who have provided the following summaries: 

Hits to Clean Energy and Manufacturing Tax Credits: 

  • The Ways & Means Committee proposal would effectively repeal IRA tax incentives – Under the W&M Committee proposal, most credits are eliminated at the end of 2025. Others have unworkable “placed in service” provisions or overly-complex and burdensome “foreign entity of concern” requirements that make them difficult to use, before they are then phased out. They have also proposed terminating the Transferability provision for the tax credits, which would harm the growing clean energy market. 
  • Specific critical clean energy tax credits affected by the bill (this list is not exhaustive):
    • Clean Energy Tax Credits (45Y and 48E) are phased out starting in 2028, before being eliminated at the end of 2031. Additionally, all date cut-off requirements have been changed from “commencement of construction” to “placed in service,” which will effectively kill most new projects and jeopardize the financing of many projects already underway. This is a radical shift in U.S. energy tax law.
    • All of the Electric Vehicle Credits (45W, 30D, 30C, 25E), including for new and used EVs, are functionally eliminated. 
    • Advanced Manufacturing Credits (45X) are subjected to unworkable new “foreign entity of concern” provisions that will freeze new investment and reverse America’s manufacturing renaissance. The credits are phased out at the end of 2031, with wind energy components no longer eligible after 2027. 
    • Home Energy Efficiency and Electrification Credits (25C) are eliminated at the end of 2025.
    • New Energy Efficient Home Credits (45L) are eliminated at the end of 2025.
    • Residential Solar and other home energy systems credits (25D) are eliminated at the end of 2025

Hits to community and economic development programs: 

The following key programs were completely repealed with any unobligated funding rescinded. Many of these programs have most of their money obligated but could still be impacted by repeal.

  • Greenhouse Gas Reduction Fund
  • Climate and Community Change Grants
  • Vehicle Efficiency and Emission Standards
  • Methane Emissions Reduction Program
  • Clean Ports Program
  • Department of Energy Loan Programs Office 
  • Climate Pollution Reduction Grants

Other Tax Provisions:

  • Note: These programs were not significantly impacted
    • Home Energy and Electrification Rebates
    • Direct Pay (aka Elective Pay) – This provision, which allows states and local governments and non-profit organizations to access 12 IRA tax credits, is not impacted by the Ways & Means proposal, although the policy would be rendered fundamentally useless if the underlying tax incentives are repealed, especially those supporting clean electricity, and electric vehicles and charging infrastructure.
  • Clean Fuels Credits are extended clean fuels to 2031 with increased generosity for fuels with land use impacts and “renewable natural gas.”
  • Hydrogen Production Tax Credit is eliminated at the end of 2025.
  • Nuclear Tax Credit is phased out beginning in 2029 – 80% in 2029, 60% in 2030, 40% in 2031, and 0% after 2031.