Elon Musk Criticizes GOP Bill for Cutting Solar Tax Credits While Oil & Gas Benefits Stay

Tesla CEO Elon Musk took to X this week to criticize a Republican megabill that would eliminate major clean energy tax credits while keeping long-standing oil and gas tax breaks in place.

His comments follow a statement from Tesla Energy, which warned that ending solar credits abruptly would threaten grid reliability and slow clean energy growth critical to AI data centers and domestic manufacturing.

What’s in the Bill?

The GOP-backed bill would:

• End the 30% Residential Clean Energy Credit (IRC Sec. 25D) by the end of 2025
• Phase out the Clean Electricity Investment Credit (Sec. 48E), excluding nuclear
• Eliminate the $7,500 EV Tax Credit (IRC Sec. 30D), disqualifying most Teslas
  

At the same time, oil and gas tax provisions would remain unchanged.

How Much Tesla Benefits from Credits

According to Tesla’s Q1 2025 earnings:

• Tesla Energy generated $8.4B in 2024 revenue, with strong growth in solar + battery sales
• Analysts estimate tax credits reduce system costs by 20–30% for residential solar customers
• Tesla vehicles accounted for ~50% of all EV tax credit claims in 2023 (IRS, JCT)

Without these credits, Tesla Energy and EV sales may face headwinds just as adoption is scaling.

Oil & Gas Deductions Still Strong

The bill keeps long-standing tax benefits for fossil fuels:

• Intangible Drilling Costs (IDCs): Deduct up to 100% of drilling expenses in year one (IRS Pub 535)
• Percentage Depletion: Deduct 15% of gross revenue on wells annually (26 U.S. Code § 613)
• Passive Loss Rules: Some investors can offset W2 income via direct energy investments (IRS Sec. 469)

These deductions are permanent, not subject to sunset rules, and are often used by high-income earners to lower taxable income significantly.

Why It Matters

The U.S. grid is under pressure from:

• AI data center demand (15–20% growth in power load by 2030 – McKinsey, 2024)
• EV adoption and home electrification
• Inflation Reduction Act clean energy goals (70% clean energy by 2035 – DOE)

Tesla and Musk argue that cutting solar credits now will derail progress, while oil & gas keep benefiting from durable, embedded tax advantages.

Takeaway

Elon Musk, once a critic of all subsidies, now defends clean energy credits as essential for energy security and economic growth. Meanwhile, oil and gas tax strategies remain one of the most stable and effective ways for investors to reduce taxes—unchanged by the current bill.

Sources:

• IRS Publication 535 – Business Expenses
• Joint Committee on Taxation (JCT) Reports, 2023
• U.S. Energy Information Administration (EIA), May 2025
• McKinsey & Company – “AI and Grid Demand,” 2024
• Tesla Q1 2025 Shareholder Letter
• U.S. Department of Energy – Clean Energy Targets