Court overturns Trump IRS guidance that targeted clean energy projects

(Washington, D.C. – June 8, 2026) A federal court has rejected a Trump administration attempt to undermine federal tax incentives for clean energy projects.

This weekend, the  U.S. District Court for the District of Columbia vacated a notice issued by the IRS last summer that abruptly eliminated a commonly-used method for wind and large solar projects to qualify for federal tax credits. The court determined that the IRS notice was “arbitrary and capricious” and stated that, “[t]he natural economic consequence of the Notice is less clean electricity generation capacity and higher electricity prices.” (Opinion, page 25)

“The Trump administration tried to twist the law to keep solar and wind projects from getting their earned tax credits – a move that would have meant less clean, affordable power for American families and more dangerous air pollution for all of us,” said David Villagrana, Lead Counsel for Environmental Defense Fund. “Vital solar and wind power projects will be able to move ahead now that the court has ruled.” 

The issue involved the long-standing “5% safe harbor” that the IRS first established in 2013, under which projects qualify for certain clean energy production and investment tax credits once they have invested 5% of the cost of their project by a given date. The IRS, at the direction of the President, eliminated this streamlined and commonly-used approach to qualifying for tax credits – but applied the change only to wind and large solar projects.

EDF filed an amicus brief in the case outlining the important role that tax credits play in supporting clean energy projects that help keep energy affordable for Americans, reduce air pollution and make the air safer to breathe for people across the country. The brief also discussed the legal deficiencies in the IRS notice.