Hydrogen Tax Credit, IRS Direct File, and the Texas R&D Credit
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
June 11: Hydrogen tax credit rescue 'on the table,' GOP senator says
The Senate is considering a plan to save a lucrative tax credit for hydrogen production that would be eliminated in the House-passed tax-and-spending mega bill.
Senator John Cornyn, a Texas Republican, indicated that preserving the incentive, which provides up to $3 per kilogram of hydrogen production, is under discussion. This credit, part of President Joe Biden's climate law, is currently set to end for projects beginning construction after this year but is intended to last through 2033.
The potential elimination of this credit has prompted lobbying efforts from various industry groups, who argue that billions in investments and tens of thousands of jobs are at risk. Senator Shelley Moore Capito of West Virginia also supports extending the qualification period for the incentive to ensure the construction of hydrogen hubs. The outcome of these discussions will significantly impact the future of the domestic hydrogen industry.
June 10: IRS updates procedures list for accounting changes
The Internal Revenue Service has released Rev. Proc. 2025-23, updating the list of automatic procedures for taxpayer-initiated requests for changes in methods of accounting.
An "automatic change" allows taxpayers to request the IRS commissioner's consent for the requested year of change under Section 5.01(1) of Rev. Proc. 2015-13. The 430-plus pages of changes cover various areas including gross income, commodity credit loans, trade or business expenses, bad debts, interest expense and amortizable bond premium, depreciation or amortization, research or experimental expenditures, elective expensing provisions, computer software expenditures, start-up expenditures and organizational fees, capital expenditures, and uniform capitalization methods.
Additional changes address losses, expenses and interest in transactions between related taxpayers, deferred compensation, cash-to-accrual methods of accounting, taxable years of inclusion, discounted obligations, prepaid subscription income, long-term contracts, taxable years incurred, rent, inventories (including LIFO inventories), mark-to-market accounting, bank reserves for bad debts, insurance companies, discounted unpaid losses, and REMICs. Examples are provided for many of the changes. Rev. Proc. 2025-23 is slated to appear in IRB 2025-24 dated June 9.
June 6: Free tax filing tool Direct File is getting the open source treatment
The IRS launched Direct File in 2024, offering US citizens a free, user-friendly online platform for filing federal income tax returns.
Despite lobbying efforts to derail the project, Direct File quickly gained popularity and is now published under an open-source license, representing a victory for taxpayers. The IRS has made most of Direct File's source code available on GitHub, though some components were excluded.
The software aims to make tax filing more accessible, available in both English and Spanish, and optimized for desktop and mobile devices. Developed by the US Digital Service and 18F, Direct File's future appears increasingly independent from federal administrations that may seek to dismantle it.
The release complies with the SHARE IT Act, promoting transparency and security. The civic tech community, including Code for America, has embraced the open-source code, posing a significant challenge to commercial tax software companies like Intuit.
June 5: Texas Extends R&D Credit and Implements Other Tax Changes in 89th Legislative Session
The 89th Texas legislative session, which ran from January 14 through June 2, resulted in significant tax changes. One of the most important changes was the extension of Texas’ Research and Development Credit (R&D Credit) through Senate Bill 2206, signed by the governor on June 1.
The bill extends the credit's expiration date, repeals the sales tax exemption portions, aligns more closely with the federal R&D credit, and increases allowable research and development expenditures for franchise tax credit purposes. Additionally, the legislature approved property tax relief, increasing the state’s homestead exemption and business personal property tax exemption.
Efforts to update Texas’s data processing statutory provisions were stalled, but the Texas comptroller amended the data processing regulation, expanding the definition and taxable activities. Senate Bill 14 eliminates the requirement for Texas courts to defer to state agency legal determinations, impacting the Texas comptroller's changes to the data processing regulation. These developments may incentivize business in the state, though the expansion of the sales tax base remains to be seen.
Economic News/Policy:
June 11: Trump’s tariffs can remain in place for now, but appeals court fast tracks a summer resolution
A US appeals court has ruled that President Donald Trump's sweeping import tariffs can remain in effect while legal challenges proceed.
The decision follows an appeal by the Trump administration against a ruling that the president exceeded his authority in imposing country-wide tariffs under a national emergency claim.
The court has expedited the case for a resolution this summer. While the White House welcomed the stay, plaintiffs expressed disappointment but hope for a swift resolution.
The ruling does not affect sector-wide tariffs on aluminum, steel, cars, and car parts, which were imposed under a different law. The outcome of this case will impact the future of Trump's tariff policies and their economic implications.
June 9: Senate enters pivotal week on reconciliation
The Senate is working to finalize the new version of the "One Big Beautiful Bill Act" by the end of this week, with discussions on tax measures potentially extending into next week.
The bill includes significant changes to clean energy tax credits, public land sales, regulations, and electric vehicle fees. Thirteen House Republicans, led by Rep. Jen Kiggans, have urged Senate leaders to fix the language that dramatically rolls back incentives for wind, solar, hydrogen, and other sources. Senate Republicans, including Sen.
Thom Tillis and Sen. Lisa Murkowski are advocating for extensions and more reasonable timelines for energy projects. Environment and Public Works Chair Shelley Moore Capito has highlighted the unfeasibility of the 60-day construction requirement for hydrogen development hubs. Conservatives, including the House Freedom Caucus, are pushing back against lenient treatment of climate law credits.
The Senate is also considering cuts to climate spending, changes to vehicle efficiency standards, and rescinding spending on green housing programs. The parliamentarian's rulings on permitting policies and electric vehicle fees will play a crucial role in the final bill. Senate Energy and Natural Resources Chair Mike Lee is working on securing permitting and drilling mandates and easing the sale of public lands. The outcome of these discussions will shape the future of U.S. energy policy and development.
June 4: Trump ratchets up steel tariffs to 50%
President Donald Trump has signed an executive order increasing tariffs on steel imports from 25% to 50%, effective immediately. This move aims to bolster the American steel industry, which has seen a decline in employment and production levels over the decades due to globalization and technological advancements.
The new tariffs also apply to aluminum products. While U.S. steel firms have welcomed the increased tariffs, citing benefits to domestic manufacturing, experts warn of broader economic repercussions. Higher steel prices may lead to reduced investment and job losses in industries reliant on steel inputs, such as automotive, construction, and solar panel manufacturing.
A study found that Trump's 2018 steel tariffs created 1,000 new direct jobs but resulted in the loss of 75,000 jobs in downstream industries due to increased costs. The United Steelworkers union has expressed mixed feelings about the tariffs, emphasizing the need for wider reforms in global trade and collaboration with allies like Canada.
Additionally, there are concerns about Trump's proposed partnership between U.S. Steel and Japan's Nippon Steel, which could impact national security and the American workforce. Overall, while the tariffs may provide a temporary boost to the steel industry, the long-term effects on the broader economy remain uncertain.
June 4: Trump tax bill will add $2.4 trillion to the deficit and leave 10.9 million more uninsured, CBO says
President Donald Trump’s proposed tax bill, known as the One Big Beautiful Bill Act, aims to introduce trillions in tax cuts while reducing federal spending. However, the Congressional Budget Office (CBO) has projected that the bill will increase the deficit by $2.4 trillion over the next decade and result in 10.9 million more people losing their health insurance.
The bill includes approximately $3.75 trillion in tax cuts, extending the 2017 individual income tax breaks and introducing new ones, such as no taxes on tips. These revenue losses are partially offset by $1.3 trillion in reduced federal spending, mainly through cuts to Medicaid and food assistance programs.
As a result, millions of people would lose their health insurance coverage, including those affected by new work requirements for Medicaid and the termination of a medical provider tax. The bill has faced strong opposition from Democrats and criticism from Elon Musk, who has urged voters to reject it.
Despite the controversy, Republican leaders are determined to push the bill forward, aiming to pass it by July 4. The bill also includes significant funding for border security and national security measures, as well as an increase to the nation’s debt limit. The CBO, established over 50 years ago, continues to provide Congress with objective and impartial information on budgetary and economic issues.
Energy and Environmental Policy/News:
June 6: Freedom Caucus warns it will ‘not accept’ Senate changes on green energy tax credits
The conservative House Freedom Caucus has stated it will not accept any Senate changes that "water down" its cuts to green energy tax credits as the Senate considers alterations to the One Big Beautiful Bill Act.
The House version of the bill imposes strict limitations on tax credits for low-carbon energy projects, requiring construction to begin within 60 days of enactment. This restriction is expected to hinder the development of new renewable energy projects.
The Freedom Caucus emphasized its stance against any loosening of these restrictions. Meanwhile, some Senate Republicans and House GOP moderates have expressed concerns about the rapid elimination of these tax credits and are calling for strategic improvements to the bill's clean energy provisions.
The debate highlights the challenges Republican leaders face in balancing different factions within the party.
June 6: Transferability is transforming clean energy project finance, say dealmakers
The tax credit transferability provision included in the Inflation Reduction Act has revolutionized clean energy project financing by introducing new deal structures and allowing developers to secure funding more quickly.
This provision has broadened the market, enabling new investors and faster transactions. Experts at the American Council on Renewable Energy’s Finance Forum highlighted that transferability has facilitated the entry of new players into the market and streamlined the closing of transactions.
The tax equity market, previously limited in capacity, has evolved to hybrid structures, significantly increasing its size. However, the future of transferability is uncertain due to congressional budget proposals that may restrict or eliminate these credits.
Despite this, experts remain optimistic about the U.S. clean energy economy, noting significant new investments and the continued benefits of transferability in expediting project development and financing. The ability to transfer tax credits has also allowed for customized transactions based on credit profiles, further enhancing the efficiency of project financing.
Technology:
June 5: Senate proposes alternative to AI moratorium in Trump’s ‘big, beautiful bill’
Senate Commerce Committee Republicans have proposed an alternative to a controversial provision in President Trump’s tax and spending bill regarding state regulation of artificial intelligence (AI).
The new Senate version requires states to refrain from regulating AI to access federal broadband funding, differing from the House version's blanket 10-year ban on state AI regulations.
This change comes after concerns from GOP members, including Rep. Marjorie Taylor Greene, who opposed the original moratorium. The bill, officially titled the One Big Beautiful Bill Act, also extends Trump’s 2017 tax cuts, boosts funding for border and defense priorities, and cuts spending on programs like food assistance and Medicaid.
June 4: Trump’s Permitting Boss Aims to Deliver on AI Data Center Plans
President Donald Trump has pushed for the construction of projects like data centers, energy projects, and factories.
The White House’s new permitting director, Emily Domenech, aims to expand her office’s work to include data centers and artificial intelligence facilities. This aligns with Trump's economic policy, which advocates for significant investments in AI ventures, semiconductor manufacturing, and hard-rock mines.
The Federal Permitting Improvement Steering Council, led by Domenech, seeks to streamline the permitting process, reducing review times and ensuring projects receive timely approvals. Domenech emphasizes a shift in mentality towards facilitating project approvals, aiming to make the federal government an enabler rather than an obstacle.
The council's role is increasingly crucial due to recent regulatory changes, making it essential to harmonize agency standards and expedite project development.
For Fun:
June 3: An accidental discovery at a planetarium opens a window into the universe’s inner workings
Scientists at the American Museum of Natural History have made a surprising discovery while preparing the planetarium show “Encounters in the Milky Way.”
While fine-tuning a scene featuring the Oort Cloud, a region filled with icy relics from the solar system’s formation, they noticed a spiral shape projected onto the dome. This unexpected observation suggested that the inner section of the Oort Cloud resembles a bar with two waving arms, similar to the Milky Way galaxy.
This finding challenges the long-held belief that the Oort Cloud is shaped like a sphere or flattened shell. The discovery, published in The Astrophysical Journal, represents a significant shift in our understanding of the outer solar system. Although confirming this shape with observations will be difficult, it opens new avenues for studying the orbits of distant comets.
The planetarium show, narrated by Pedro Pascal, features many vivid scenes, but the accidental discovery of the Oort Cloud’s shape stands out as a remarkable scientific breakthrough.