New Tax Law 2025: A Sector-by-Sector Guide to Permanent Incentives and Investment Wins

The 2025 Tax Law represents one of the most consequential pieces of legislation for U.S. capital markets in decades. By permanently codifying incentives across renewable energy, housing, and technology sectors while imposing new restrictions on foreign-linked entities, the law reshapes the calculus for investors. Let's dissect the opportunities and risks for each sector, with actionable insights for portfolio adjustments.

Renewable Energy: A Goldilocks Scenario for Domestic Projects

The law's renewable provisions are a mix of carrots and sticks. Key benefits include:
- Clean Energy Tax Credits (Sections 45Y/48E): Projects starting construction by July 4, 2026, qualify for full credits if placed in service by December 31, 2030. Wind and solar developers must now meet rising domestic content thresholds (40% in 2026, rising to 60% by 2030).
- Advanced Nuclear Adder: A 10% boost to credits for advanced nuclear facilities under Section 45Y.
- Carbon Sequestration: Harmonized credits of $85/ton for carbon capture and storage.

Investment Opportunities:
- Winners: Companies with strong domestic supply chains and projects ready to break ground by mid-2026.
- NextEra Energy (NEE): The largest U.S. renewable generator, well-positioned to exploit tax credits and its existing fleet.
- Vestas Wind Systems (VWSYF): A global leader in wind turbines, but its U.S. partnerships and supply chain investments make it eligible for credits.
- First Solar (FSLR): Focus on U.S. solar projects and domestic manufacturing facilities align with content requirements.

Beware the Clock: Projects starting after December 31, 2025, face FEOC restrictions, and credits for non-wind/solar technologies phase out by 2036. Investors should prioritize companies with construction start dates before July 2026 and supply chains compliant with domestic content rules.

Housing: Affordable Growth, but Watch the Sunset

The law supercharges affordable housing development while ending some energy-efficient home credits.

• Low-Income Housing Tax Credit (LIHTC): Increased allocations and lowered financing thresholds will boost demand for affordable multifamily housing.
• Retrofit for Resilience Credit: Eliminated for homes acquired after June 30, 2026.

Investment Focus:
- REITs with Affordable Housing Exposure:
- Equity Residential (EQR): Focus on urban multifamily housing, which benefits from LIHTC expansion.
- AvalonBay Communities (AVB): Strong track record in mixed-income developments.

Strategy: Investors should overweight housing REITs with LIHTC-backed projects but avoid speculative bets on energy-efficient home credits, which are now sunset.

Technology & Manufacturing: A 100% Bonus for U.S. Production

The law's most sweeping change for tech is the 100% bonus depreciation for qualified manufacturing property (Section 168(n)). This allows companies to fully write off capital expenditures in the year they're placed in service until 2031.

• Eligibility: Applies to property beginning construction between 2025 and 2029. Excludes R&D or administrative facilities.
• Impact: Encourages U.S. factory investments, favoring companies with domestic manufacturing footprints.

Top Picks:
- Intel (INTC): Its $20B U.S. chip plant in Ohio qualifies for full depreciation, boosting cash flow.
- Tesla (TSLA): With Gigafactories in Texas and Nevada, its U.S. production benefits from both tax credits and depreciation incentives.

Risks: Companies must ensure their projects meet "qualified production property" definitions. Avoid firms relying on foreign supply chains (e.g., those linked to China) for equipment, as FEOC rules now apply to tech-related credits starting in 2026.

Cross-Cutting Risks and Long-Term Shifts

• Foreign Entity Restrictions (FEOC): Starting 2026, projects involving entities linked to China, Russia, or Iran will lose tax credits. This accelerates the "decoupling" of U.S. supply chains from China.
• Master Limited Partnerships (MLPs): New MLP eligibility for carbon capture and hydrogen storage could unlock capital for infrastructure projects.

The law's domestic content mandates and sunset clauses create a race to deploy capital before deadlines. Investors should favor companies with:
1. Projects already in the pipeline (e.g., NextEra's 2026 deadlines).
2. Strong U.S. supply chain partnerships (e.g., First Solar's Ohio factories).
3. Manufacturing-heavy business models (e.g., Intel's chip plants).

Immediate Investment Actions

1. Overweight Renewable Energy and Housing REITs: NEE, FSLR, EQR.
2. Buy Tech Manufacturing Plays: INTC, TSLA.
3. Avoid EV/SAF Credits: The phaseout of electric vehicle tax credits (ending Sept 2025) and reduced sustainable aviation fuel (SAF) incentives may hurt companies like Tesla or United Airlines (UAL) in the long term.

The 2025 Tax Law is a blueprint for where capital will flow over the next decade: domestic manufacturing, clean energy with local supply chains, and affordable housing. Investors who align with these themes—and avoid sunset clauses—will position themselves for durable gains.

Final Thought: This isn't just about tax credits—it's about reshaping America's industrial landscape. The clock is ticking; act before the deadlines.