The One Big Beautiful Bill: Impacts To Federal Grant, Loan, And Tax Credit Opportunities

The One Big Beautiful Bill Act (OBBB) was signed into law by President Donald J. Trump on July 4, 2025. Among many changes, the bill established new federal grant and loan programs, re-allocated the funding of existing programs, and significantly restructured the flow of federal incentives, shifting focus towards the Department of Defense (DOD) and away from the Department of Energy (DOE). The OBBB can be considered a deliberate shift in U.S. industrial policy, characterized by the restructuring of federal tax incentives and how projects are funded or financed by the federal government. For example, the legislation greatly reduced the loan authority for the DOE's Loan Programs Office (LPO) while substantially increasing the loan authority and financial resources available to the DOD for funding domestic manufacturing, critical minerals, or energy projects.

Ankura estimates that the OBBB provides over $200 billion in new funding authority and programs across the DOD and the DOE that can be tapped to develop advanced manufacturing, critical minerals, and energy projects (fossil fuels and nuclear).

In addition, the bill made key changes to federal tax credit programs, including those that provide incentives for domestic projects like Opportunity Zones and the New Markets Tax Credit, as well as altering how property and equipment are treated from a tax perspective.

It will have a significant impact on economic development across the U.S. as it fundamentally alters location-based incentives and reshapes the types of projects the federal government will prioritize towards sectors deemed critical for national security, while de-emphasizing clean energy.

Key Takeaways

• The OBBB provides the DOD with over $200 billion in funding that can be used for loans, grants, other transaction authority agreements (OTAs), government contracts, and offtake agreementsfor 11 major sections focused on enhancing military capabilities, strengthening the defense industrial base, and improving military readiness. This includes $100 billion in new direct loans and loan guarantee authority, $29 billion for naval fleet expansion, $25 billion for munitions production, $25 billion for integrated air and missile defense systems, and $15.3 billion for technology and innovation programs.
• The OBBB reduces the funding available for DOE grant and loan programs by restructuring the LPO. The billreduced the loan authority available to the DOE's LPO to $1 billion and created a new loan program, "Energy Dominance Financing," to support fossil fuel projects, nuclear power, and critical minerals. This marks a significant reduction and shift in focus for the LPO, which has built a $43.9 billion loan portfolio for clean energy and critical minerals projects across the country through programs such as Title 17 Clean Energy Financing and the Advanced Technology Vehicles Manufacturing Program.
• The OBBB canceled and rescinded the funding for numerous Biden-era clean energy programs, including the $27 billion Greenhouse Gas Reduction Fund, $5 billion Climate Pollution Reduction Grants, $3 billion Environmental Justice Block Grants, $3.6 billion in DOE Title 17 loan guarantees, $3 billion for Advanced Technology Vehicles Manufacturing loans, $5 billion for Energy Infrastructure Reinvestment programs, and $2.15 billion for GSA Low-Carbon Materials.
• The OBBB makes significant changes to how the purchase of property and equipment is taxed, financed, and incentivized, including permanent 100% bonus depreciation for qualifying production equipment, 100% first-year depreciation for buildings that are used for certain manufacturing, enhanced Section 45X manufacturing credits through 2032, permanent Opportunity Zones with expanded New Markets Tax Credits, and increased semiconductor manufacturing investment credits from 25% to 35%.

DOD Programs

The OBBB provides DOD with over $200 billion in funding divided across 11 major sections focused on enhancing military capabilities, strengthening the defense industrial base, improving military readiness, enhancing deterrence against near-peer competitors, and supporting quality of life for service members and their families.

DOD Loan Authority ($100 Billion)

Section 20005(b) of the OBBB authorizes up to $100 billion in loan guarantees and direct lending under enhanced DOD authorities through $1 billion appropriated to the DOD Credit Program Account. The program carries out the capital assistance program, including loans, loan guarantees, and technical assistance, established under section 149(e) of title 10, U.S. Code.

Qualifying industries and projects include critical minerals mining and processing facilities, semiconductor manufacturing, advanced battery production, defense manufacturing capabilities, supply chain infrastructure for strategic materials, and technologies essential to national security applications under related Covered Technology Categories as defined in the FY24 NDAA. The appropriation language states: "such amounts are available to subsidize gross obligations for the principal amount of direct loans, and total loan principal, any part of which is to be guaranteed, not to exceed $100,000,000,000."

Eligibility requirements include demonstration of national security relevance, domestic production commitments, supply chain security enhancements, and compliance with foreign entity restrictions. Projects must also show reasonable prospects for repayment and align with DOD's strategic objectives for industrial base strengthening. The program operates through existing federal credit agencies while providing manufacturers and developers with access to federally-backed financing for projects where traditional financing may be insufficient to support necessary investments in domestic capacity.

Naval Fleet Expansion ($29 Billion)

Section 20002 allocates $29 billion for naval fleet expansion and shipbuilding industrial base revitalization. Fleet expansion investments include $5.4 billion for two Arleigh Burke-class guided missile destroyers, $4.6 billion for a second Virginia-class submarine in FY2026, $2.1 billion for medium unmanned surface vessels, and $1.3 billion for unmanned underwater vehicle production expansion. Industrial base revitalization receives $750 million for supplier development across the naval industrial base, $500 million for additional dry dock capability to address maintenance backlogs, and $450 million for maritime workforce development programs.

Munitions and the Munitions Supply Chain ($25 Billion)

Section 20004 addresses munitions consumption rates and supply chain vulnerabilities through targeted investments in production capacity and supply chain resilience. Specific munitions investments include $688 million for long-range multiservice cruise missiles, $630 million for long-range Navy air defense and anti-ship missiles, $400 million for heavyweight torpedoes, and $400 million for hypersonic strike program acceleration. Manufacturing modernization receives $1 billion for next-generation automated munitions production factories and $500 million for the expansion of defense advanced manufacturing techniques. Supply chain investments include $400 million for emerging solid rocket motor industrial base development, $200 million for existing solid rocket motor investments, and $42 million for second sources of large-diameter solid rocket motors.

Integrated Air and Missile Defense Systems ($25 Billion)

Section 20003 allocates substantial resources to develop and deploy advanced missile defense capabilities, supporting President Trump's "Golden Dome for America" vision for comprehensive missile defense. Key investments include $7.2 billion for military space-based sensors, $5.6 billion for space-based and boost phase intercept capabilities, $2.55 billion for military missile defense development and procurement, and $2.2 billion for hypersonic defense system acceleration. Additional funding supports $2 billion for air-moving target indicator military satellites, $1.98 billion for improved ground-based missile defense radars, $800 million for next-generation Intercontinental Ballistic Missile (ICBM) defense systems, $530 million for Missile Defense Agency instrumentation range safety ship, $500 million for national security space launch infrastructure, and $250 million for directed energy capabilities development.

Critical Minerals Supply Chain Development ($7 Billion)

The OBBB provides $7 billion in federal investment for critical minerals supply chains through multiple funding mechanisms, recognizing that domestic processing capabilities are essential to reducing foreign dependencies while building resilient supply chains for advanced technologies.

The funding is deployed through three primary mechanisms:

Grants ($5 Billion)

Section 20004 designates $5 billion for critical minerals supply chain investments through the Industrial Base Fund, operating primarily through Defense Production Act Title III authorities. This funding supports mining facility development, processing plant construction, refining capacity expansion, and supply chain integration projects through grants, purchase commitments, and direct investments to address strategic supply chain shortfalls.

Stockpile Enhancement ($2 Billion)

The legislation provides $2 billion for improving the U.S. stockpile of critical minerals through the National Defense Stockpile program managed by the Defense Logistics Agency. This investment addresses strategic material shortages while providing buffer capacity for supply chain disruptions through strategic material acquisition, storage facility development, and stockpile modernization.

Critical minerals investments prioritize domestic production capabilities for rare earth elements, lithium, cobalt, graphite, and other materials identified as critical to national security applications. Priority materials include those essential to defense manufacturing, advanced technology production, and renewable energy deployment, with funding supporting the entire supply chain from mining through processing and integration into finished products.

Technology and Innovation Programs ($15.3 Billion)

Section 20005 provides $15.3 billion for scaling low-cost weapons into production and bridging the "valley of death" between R&D and production. Major investments include $2 billion for Defense Innovation Unit scaling of commercial technology, $1.5 billion for low-cost cruise missile development, $1.4 billion for small unmanned aerial system industrial base expansion, and $1 billion to accelerate innovative technology procurement and fielding.

Defense Innovation Unit ($2 Billion)

DIU accelerates commercial technology adoption through Commercial Solutions Openings and Other Transaction Authority (OTA). The process enables prototype contracts within 60-90 days with direct pathways to production contracts without further competition.

Office of Strategic Capital ($45 Million)

The Office of Strategic Capital receives $25 million for the Global Technology Scout program and $20 million for workforce expansion, enhancing its capacity to provide loans and loan guarantees for companies scaling critical technologies.

Additional Technology Investments

Additional technology investments include $750 million for innovative military logistics and energy capabilities, $650 million for Mission Capabilities office joint prototyping, $600 million for Strategic Capabilities Office program acceleration, $500 million for advanced 5G/6G military technologies, $500 million to prevent delays in attributable autonomous military capabilities, $400 million for advanced command-and-control tools, $400 million for defense manufacturing technology program expansion, and $125 million for small portable modular nuclear reactor development.

Table 1: Department of Defense Funding Summary

DOE Programs

The OBBB fundamentally restructures DOE funding by rescinding approximately $50 billion in Inflation Reduction Act programs and establishing new "Energy Dominance" financing focused on domestic energy production, critical minerals processing, and resource security.

Biden-Era Program Rescissions (Over $50 Billion)

The legislation eliminates several major programs through targeted rescissions of unobligated funds:

Major Grant Program Eliminations:

• $27 billion Greenhouse Gas Reduction Fund
• $5 billion Climate Pollution Reduction Grants
• $3 billion Environmental and Climate Justice Block Grants
• $2.15 billion GSA Low-Carbon Materials for Federal Buildings
• $1.55 billion Methane Emissions Reduction Program
• $1 billion Clean Heavy-Duty Vehicle Program
• $975 million GSA Emerging Technologies sustainability programs
• $280 million EPA air pollution monitoring programs
• $250 million Environmental Production Declaration Assistance
• $250 billion GSA green buildings conversion funding

DOE Loan Program Rescissions:

• $5 billion Energy Infrastructure Reinvestment (EIR) program
• $3.6 billion Title 17 Innovative Technologies Loan Guarantee Program
• $3 billion Advanced Technology Vehicles Manufacturing (ATVM) program
• Remaining Tribal Energy Loan Guarantee Program funding
• Multiple transmission deployment and siting programs

These rescissions effectively reverse federal strategy of providing large-scale grant funding for climate mitigation projects while eliminating billions in clean energy loan guarantee authority.

Energy Dominance Financing Authority ($1 Billion)

Section 50403 establishes Energy Dominance Financing under amended Section 1706 of the Energy Policy Act, providing $1 billion in credit subsidy for domestic energy production and critical materials projects through DOE's LPO. This program fundamentally realigns LPO's mission from decarbonization to energy security and resource independence. The program explicitly removes greenhouse gas reduction requirements while shifting the priorities of the office to include fossil fuel projects and nuclear energy, while placing greater emphasis on critical minerals.

Notably, President Trump's FY 2026 Budget Request requested a $30 billion increase in LPO's loan authority as well $750 million in credit subsidies specific to nuclear energy, which may bring up the $1 billion provided by the OBBB. Combined with the OBBB's Energy Dominance Financing authority, these programs could provide over $31 billion in federal loan capacity specifically targeting nuclear power development, critical minerals processing, and energy infrastructure projects.

Table 2: DOE Funding Summary

Changes to Federal Tax Incentives for Manufacturing and Renewable Energy

The OBBB preserves and modifies manufacturing tax credits while implementing foreign entity restrictions designed to eliminate certain competitors from credit eligibility and prioritize domestic supply chain development.

The OBBB accelerates the phase-out of the Section 45X Advanced Manufacturing Production Credit.

The legislation maintains Section 45X credits for critical manufacturing sectors through 2032, providing manufacturers with multi-year revenue enhancement opportunities. Solar component manufacturing receives particularly favorable treatment with credits preserved at current levels through Dec. 31, 2032, without phase-down periods.

Table 3: Section 45X Advanced Manufacturing Credits

Wind energy components lose Section 45X eligibility after Dec. 31, 2027. The legislation also creates new eligibility for metallurgical coal as a critical mineral under Section 45X.

The OBBB establishes new Foreign Entity Of Concern (FEOC) Restrictions and Domestic Content Requirements for projects that receive federal incentives.

The OBBB introduces comprehensive foreign entity restrictions across multiple federal incentive programs, establishing that eligible components cannot include material assistance from prohibited foreign entities while categorically prohibiting specified foreign entities and foreign-influenced entities from claiming benefits. These restrictions apply to Section 45X manufacturing credits (with escalating domestic content from 50-60% in 2026 to 85% after 2029 for solar and battery components), Section 45Y production tax credits, Section 48E investment tax credits (including 10-year recapture provisions for payments to prohibited entities), the $100 billion DOD loan guarantee program, Energy Dominance Financing loans, and Industrial Base Fund grants. The restrictions represent a comprehensive approach to excluding Chinese and other prohibited foreign entities from accessing U.S. federal incentives while requiring escalating domestic content to ensure American manufacturing benefits from federal support.

The OBBB accelerates termination of Section 45Y production tax credits for wind and solar while preserving credits for other renewable technologies.

The OBBB significantly modifies the Section 45Y Clean Electricity Production Tax Credit by accelerating termination schedules for wind and solar technologies while preserving credits for other renewable technologies. Section 70512(a) amends Section 45Y(d) to terminate production tax credits for wind and solar facilities placed in service after Dec. 31, 2027. The legislation provides safe harbor provisions for projects that commence construction within twelve months of the bill's signing (by July 4, 2026). Projects meeting this deadline receive up to four years to complete construction under existing Treasury guidance, effectively extending eligibility through 2030 for qualifying projects. Other renewable technologies, including qualified energy storage, hydropower, geothermal, biogas, waste-to-energy, and fuel cell projects, maintain Section 45Y eligibility with the original IRA phaseout schedule beginning in 2034. The bill also adds a new nuclear "energy community" bonus credit under Section 45Y equal to 10% of the credit amount for advanced nuclear facilities situated in metropolitan statistical areas with 0.17% or greater direct employment related to nuclear power advancement after Dec. 31, 2009.

The OBBB terminates Section 48E investment tax credits for wind and solar while expanding eligibility for fuel cells and preserving energy storage credits.

The OBBB makes parallel changes to the Section 48E Clean Electricity Investment Tax Credit, terminating credits for wind and solar facilities placed in service after Dec. 31, 2027 while preserving the same safe harbor provisions as Section 45Y. Section 70513(a) amends Section 48E(e) to establish these termination dates for solar and wind technologies. The legislation expands Section 48E eligibility for qualified fuel cell property beginning construction after 2025. These projects receive a 30% investment tax credit without regard to greenhouse gas emissions requirements or prevailing wage and apprenticeship requirements, but are not eligible for energy community or domestic content bonus credits available to other technologies. Energy storage technology receives favorable treatment under Section 70513(a)(2)(C), which specifies that Section 48E termination provisions "shall not apply with respect to any energy storage technology which is placed in service at any applicable facility." This preserves energy storage investment tax credits through 2033 regardless of pairing with other renewable technologies. The bill modifies domestic content requirements under Section 48E to align with Section 45Y thresholds, establishing escalating requirements of 40% domestic content for projects beginning construction before June 16, 2025, rising to 55% for projects beginning construction after 2026. The legislation also introduces new recapture provisions allowing 100% recapture of Section 48E credits if specified taxpayers make applicable payments to prohibited foreign entities during the 10-year period after facility placement in service.

The OBBB increases Section 48D advanced manufacturing investment tax credits from 25% to 35% for semiconductor facilities.

Section 70308 increases the advanced manufacturing investment credit under Section 48D from 25% to 35% for semiconductor manufacturing facilities placed in service after Dec. 31, 2025. The enhanced credit applies to new factories or expansions for semiconductor and semiconductor manufacturing equipment production, with facilities required to be under construction by the end of 2026. Companies entitled to enhanced manufacturing credits can apply to the IRS for cash refunds, effectively making the credits refundable and accessible to entities without sufficient tax liability to utilize credit benefits fully.

The OBBB makes the Opportunity Zones (OZ) and New Markets Tax Credit (NMTC) programs permanent.

The OBBB enhances existing investment incentive programs while creating new mechanisms for community development and strategic industry support, with particular focus on permanent program structures that provide long-term investment certainty.

Opportunity Zones Program

The legislation makes the Opportunity Zone program permanent while establishing systematic redesignation every ten years beginning July 1, 2026. New zone designations must meet specific economic distress criteria with census tracts requiring poverty rates of at least 20% or median family income not exceeding 70% of area median income. The legislation mandates at least 33% of new zones be rural areas, addressing previous urban bias where 95% of investment flowed to urban zones. The program excludes census tracts where median family income exceeds 125% of area median income. The permanent program adds a 30-year disposal requirement for full gain exclusion and significant new reporting requirements.

New Markets Tax Credit Program

The OBBB increases annual New Markets Tax Credit allocation authority from $5 billion to $7.5 billion beginning in 2026, providing Community Development Entities with substantially enhanced capacity for low-income community investments. Expanded eligible investment categories include critical minerals processing facilities, domestic manufacturing operations, supply chain infrastructure, and energy independence projects serving low-income communities.

The OBBB expands Master Limited Partnership qualifying income to include hydrogen, nuclear, geothermal, and sustainable aviation fuels.

Section 70524 expands qualifying income definitions for Master Limited Partnerships to include hydrogen transportation and storage, electricity generation at carbon capture facilities, advanced nuclear electricity production, geothermal energy operations, and transportation and storage of biofuels and sustainable aviation fuels.

The OBBB preserves municipal bonds' tax-exempt status as a financing tool for local governments.

The legislation protects municipal bonds' tax-exempt status, maintaining a critical financing tool for local governments. Localities rely on municipal bonds to finance transportation, housing, energy, and water projects, preserving this essential infrastructure financing mechanism.

The OBBB restores permanent 100% bonus depreciation for qualified business property placed in service after Jan. 19, 2025.

Section 70301 restores permanent 100% bonus depreciation for qualified business property placed in service after Jan. 19, 2025, reversing scheduled phase-downs that would have reduced bonus depreciation to zero by 2027. Qualified business property includes tangible personal property with a recovery period of 20 years or less (such as machinery, equipment, computers, and vehicles), computer software, qualified improvement property to nonresidential real property, and certain plants bearing fruits or nuts. This allows manufacturers and businesses to immediately expense the full cost of equipment purchases rather than depreciating them over multiple years.

The OBBB allows 100% first-year depreciation for manufacturing buildings constructed between 2025 and 2029.

Section 70307 allows for 100% first-year depreciation for manufacturing buildings through new Section 168(n). The provision applies to property where construction begins after Jan. 19, 2025 and before January 1, 2029, with placement in service required before Jan. 1, 2031.

The OBBB allows immediate expensing of domestic R&D while requiring 15-year amortization for foreign research expenses.

Section 70302 establishes new Section 174A allowing immediate expensing of domestic research and experimental expenditures while requiring 15-year amortization for foreign research expenses.

The OBBB expands qualified small business stock tax benefits through reduced holding periods and increased exclusion caps.

Section 70401 expands Section 1202 qualified small business stock benefits through reduced holding periods (50% exclusion after three years, 75% after four years), increased gain exclusion caps from $10 million to $15 million, and raised gross asset thresholds from $50 million to $75 million. Qualified small business stock (QSBS) allows investors in qualifying small businesses to exclude capital gains from federal taxes when they sell their stock, providing significant tax incentives for startup and small business investment. The original stock must be acquired directly from a qualifying small business corporation with gross assets under the threshold limits.

The OBBB increases Section 179 expensing limits from $1 million to $2.5 million for small businesses.

Section 70306 increases Section 179 expensing limits from $1 million to $2.5 million, with phase-out thresholds rising from $2.5 million to $4 million. Section 179 expensing allows small businesses to immediately deduct the full cost of qualifying equipment and property purchases in the year they are placed in service, rather than depreciating the costs over several years. This provides immediate tax relief and improved cash flow for small businesses making equipment investments.

How Ankura Can Help

Ankura's Global Strategic Advisory team specializes in helping businesses across the U.S. and abroad navigate and secure federal and state incentives to support growth, innovation, and development. As policy priorities shift with the incoming Trump Administration, our team monitors developments and provides tailored support to maximize the value of available programs. Whether you are seeking tax credits, grants, or financing for your projects, we ensure you stay ahead of evolving opportunities. Our services include:

• Incentive Eligibility Assessment: Identifying the programs and opportunities best suited to your organization's needs and goals, with particular attention to emerging opportunities in energy development, tribal partnerships, and public land initiatives.
• Strategic Application Support: Guiding you through the application process, ensuring compliance with program requirements, and developing compelling submissions that align with new federal priorities and streamlined permitting processes.
• Financial Modeling and Impact Analysis: Creating detailed financial models to highlight the value of incentives and their impact on your projects, including analysis of market-driven approaches to emissions reduction and energy development opportunities.
• Stakeholder Advocacy: Engaging with local, state, and federal officials to build support for your projects and secure necessary approvals, with specialized expertise in tribal consultation and multi-jurisdictional projects.

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