U.S. solar stocks slid in premarket trading on Tuesday after a Senate panel proposed phasing out solar and wind tax credits by 2028, part of changes to President Donald Trump's sweeping tax-and-spending bill.

While the Senate proposal would eventually remove credits provided by the Biden administration’s Inflation Reduction Act, analysts at J.P. Morgan and Mizuho said the Senate version is better for shares of solar and other renewables companies than the version passed by the House of Representatives in late May.

Solar energy stocks dropped sharply on Tuesday as the market digested cuts to renewable power tax credits in the Senate's version of the budget bill.