On January 20, 2025, Donald J. Trump was inaugurated as the 47th President of the United States. As expected, President Trump took several executive actions in his first hours in office. The discussion below considers the potential impact of certain of the executive actions on the energy tax credits under the Inflation Reduction Act of 2022 (IRA), and the administration of such credits by the Internal Revenue Service (IRS).
Unleashing American Energy
In an executive order titled, “Unleashing American Energy,” President Trump revoked several of former-President Joe Biden’s energy-focused executive orders. The revoked orders include the “Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022”, pursuant to which the Biden administration established the White House Office on Clean Energy Innovation and Implementation and generally directed federal agencies to prioritize the construction of clean energy generation, storage, and transmission. Additionally, this executive order from President Trump imposes an immediate pause on the disbursement of funds appropriated through the IRA and requires agency heads to review their processes and policies for disbursing funds. The agency heads must submit a report detailing their findings within 90 days, and only upon review and approval of this report by the Office of Management and Budget (OMB) will agencies be permitted to disburse additional funds. The order specifically announces an end to the electric vehicle (EV) mandate.
In a Memorandum to the Heads of Departments and Agencies, the OMB provided guidance on what qualifies as a “disbursement” for the purposes of this executive order. This memo clarifies that only disbursements of funds supporting programs, projects, or activities that could be implicated by the policy concerns established in section 2 of the executive order would be paused. Section 2 of the order does not contain any prohibitions on payment of tax credits. The executive order directs agencies to “consider[] the elimination of unfair subsidies and other ill-conceived government-imposed market distortions” with respect to EVs, implicitly recognizing that elimination of such credits requires legislative action. The executive order also requires that it be implemented in a manner consistent with applicable law.
Regulatory Freeze
President Trump kept up the tradition of modern presidents and issued a regulatory freeze as one of his first acts in office. As part of the freeze, Trump ordered all agencies to stop proposing or issuing new rules that had not been reviewed and approved by a Trump appointee. Agencies are also required to withdraw any unpublished rules that had already been sent to the Office of the Federal Register and to consider postponing for 60 days the effective date of published rules that had yet to take effect.
Hiring Freeze
President Trump also issued an executive action instituting a hiring freeze on all federal civilian employees across the executive branch, which freeze will continue until OMB, in consultation with the Office of Personnel Management (OPM) and the Department of Government Efficiency (DOGE), submits a plan to reduce the size of the government’s workforce. This plan must be submitted within 90 days. On release of the plan, the hiring freeze will expire for all executive departments, except for the IRS. The IRS will be unable to hire additional personnel until the Treasury Department, in consultation with OMB and DOGE, determines it is in the national interest to lift the IRS’s hiring freeze.
Conclusion
Although the executive actions taken by President Trump on his first day in office provide clues for the future of the IRA and the IRS, significant questions remain. We will continue to monitor this area for additional updates.
1 See Pineros y Campesinos Unidos v. Pruitt, 293 F. Supp. 3d 1062 (N.D. Cal. 2018) (holding that the Environmental Protection Agency’s delay of the effective date for regulations concerning the certification and use of certain pesticides violated
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