TRENTON, N.J. — A sweeping new federal proposal in Congress, backed by President Donald Trump includes tax penalties and funding restrictions that could severely impact New Jersey’s offshore wind initiatives, a key policy focus of Governor Phil Murphy’s administration.
The proposal is part of the U.S. Senate’s version of the “Big Beautiful Bill”.
The proposed legislation, introduced in the U.S. Senate, imposes an excise tax on wind and solar energy facilities that receive “material assistance” from entities tied to foreign governments designated as prohibited, such as China. If passed, the bill would eliminate clean electricity investment credits for projects involving those entities and terminate key tax incentives for wind and solar facilities placed in service after December 31, 2027.
Under the proposed Chapter 50B of the Internal Revenue Code, a new tax would be levied on facilities violating the “material assistance cost ratio” threshold. These rules would apply to projects constructed after June 16 and affect entities receiving parts or funding from suppliers linked to prohibited foreign entities, as defined in the bill.
Key Points
- Wind and solar projects using materials from prohibited foreign entities would face new taxes
- Clean electricity credits would be revoked for facilities built after 2027
- New Jersey’s offshore wind plans could be affected if linked to foreign suppliers
“Section 48E shall not apply to any qualified property placed in service by the taxpayer after December 31, 2027, which is part of an applicable facility,” the bill states, directly targeting wind and solar investments under current clean energy laws.
The legislation also mandates a recapture of any investment tax credits claimed by companies that make payments to prohibited foreign entities within 10 years of a project’s launch. The penalty would amount to 100 percent of the previously claimed credit, effectively voiding federal support retroactively.
Governor Murphy has prioritized offshore wind development as a central piece of New Jersey’s clean energy strategy, but any component sourcing from affected countries could now draw scrutiny or lose eligibility for federal funding if the bill becomes law.
Trump’s proposed energy bill aims to choke off tax credits for wind and solar projects tied to foreign suppliers, potentially disrupting New Jersey’s offshore wind goals.