45Q Repeal Act of 2025
Sponsored By: Representative Perry, Scott [R-PA-10]
Introduced
Summary
This bill would repeal the 45Q carbon oxide sequestration tax credit, removing the credit from the tax code while keeping a short transition for prior definitions and storage rules. It also would sweep away 45Q references across multiple tax provisions and require regulators to set standards for secure geological storage.
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- Project owners and developers: Would lose access to the Section 45Q credit for taxable years beginning after December 31, 2025, though the bill preserves a transitional reference to the prior definition of “qualified carbon oxide” for certain purposes.
- Tax and credit mechanics: Would strike 45Q-related provisions across the code and change related rules, including removing a paragraph in Section 6417 and adding a new 12-year measurement reference tied to when equipment is placed in service.
- Regulators and storage standards: Would require regulations ensuring safe geological storage of captured carbon, including storage in deep saline formations, oil and gas reservoirs, and unminable coal seams, and would tie the meaning of qualified carbon oxide to the pre-enactment definition.
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Bill Overview
Analyzed Economic Effects
4 provisions identified: 1 benefits, 2 costs, 1 mixed.
Businesses lose carbon-capture tax credit
This bill would repeal the carbon-capture tax credit (45Q). Businesses and investors could not claim it for tax years beginning after December 31, 2025. It would also strip 45Q cross-references from several clean-energy and general business credits. Projects that counted on 45Q-linked rules would need to follow the new, narrower credit language.
Keeps old rules for carbon-capture bonds
The bill would keep the old 45Q(e)(3) wording for private activity bond rules. Issuers and project sponsors could keep relying on those prior definitions for bond qualification. This would apply to tax years beginning after December 31, 2025.
New limits on clean energy direct pay
If enacted, rules for direct pay elections would change. Section 6417 would use a 12-year period starting when equipment was first placed in service and would strike an existing paragraph. Some cross-references would be frozen to the pre-enactment 45Q text, and a transfer-rule clause would be removed. These tweaks would apply to tax years beginning after December 31, 2025, and could lower or change payments.
Captured CO2 excluded from power emissions
For the tech-neutral power credit, captured CO2 could be excluded from a plant’s emissions if it is securely stored or properly used. Treasury, with EPA, Energy, and Interior, would need to set rules for safe geological storage, including saline formations, oil and gas reservoirs, and unminable coal seams. The term qualified carbon oxide would use the meaning in 45Q(c) as it stood the day before enactment. These rules would start for tax years beginning after December 31, 2025.
Sponsors & CoSponsors
Sponsor
Perry, Scott [R-PA-10]
PA • R
Cosponsors
Khanna
CA • D
Sponsored 3/6/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov