Energy Tax Provisions: Overview and Budgetary Cost

Energy Tax Provisions: Overview and

Budgetary Cost

Updated February 26, 2024

Congressional Research Service

https://crsreports.congress.gov

R46865

Energy Tax Provisions: Overview and Budgetary Cost

Contents

Direct (Cash) Payments ................................................................................................................... 2

Credit Transfers ............................................................................................................................... 2

Tables

Table 1. Renewable Energy Tax Incentives ..................................................................................... 4

Table 2. Energy Efficiency Tax Incentives ..................................................................................... 11

Table 3. Tax Incentives for Vehicles and Vehicle Infrastructure.................................................... 14

Table 4. Renewable and Alternative Fuels Tax Incentives ............................................................ 22

Table 5. Fossil Fuels Tax Incentives .............................................................................................. 27

Table 6. Carbon Capture and Sequestration, Nuclear, and Other Tax Incentives .......................... 33

Contacts

Author Information........................................................................................................................ 36

Energy Tax Provisions: Overview and Budgetary Cost

T

he 117th Congress revamped significant portions of energy tax law. In the Infrastructure,

Investment, and Jobs Act (P.L. 117-58), the Chips and Science Act (P.L. 117-167), and the

Inflation Reduction Act of 2022 (IRA; P.L. 117-169), Congress enacted 11 new energy tax

provisions and modified or extended 12 existing provisions. The IRA in particular enacted or

changed 21 energy tax provisions, including tax credits for carbon capture and storage, energyefficient building modifications, clean electricity generation, and purchases of electric vehicles.1

The IRA also created direct payments and credit transfers, two new tax mechanisms that expand

the number of energy providers that can benefit from nonrefundable credits. At the time of

enactment, the Joint Committee on Taxation (JCT) estimated that the energy tax credits and

deductions in the IRA would increase FY2022-FY2031 deficits by a combined $271 billion.2

This report provides background information on current-law, energy-specific provisions in the

federal income tax code (including both personal and corporate income taxes). It does not discuss

energy-specific excise tax provisions, with the exception of tax credits used to offset both income

and excise tax liabilities.3 It includes all energy provisions projected by the JCT to affect income

tax revenues over the FY2023-FY2027 period, though not every provision is available to

taxpayers in every year. For example, certain credits for other alternative fuel vehicles (discussed

in Table 4) only apply to vehicles purchased before 2011; however, because the credit can be

carried forward to offset tax liabilities up to 20 years into the future, these credits are expected to

reduce federal revenues in the coming years.

Following a description of direct pay and credit transfer tax mechanisms, this report presents a

series of tables, each of which includes (1) the name of the provision and its Internal Revenue

Code (IRC) section; (2) a description of the provision; (3) the law first enacting the provision; (4)

when the provision expires (if applicable) under current law; and (5) a cost estimate (if

available).4 Energy income tax provisions have been categorized as follows:

•

•

•

•

•

•

renewable energy tax incentives (Table 1);

energy efficiency tax incentives (Table 2);

tax incentives for vehicles and vehicle infrastructure (Table 3);

renewable and alternative fuels tax incentives (Table 4);

fossil fuel tax incentives (Table 5); and

carbon capture and sequestration (CCS), nuclear, and other tax incentives (Table

6).

1 The IRA enacted nine energy tax credits in Sections 25E, 40B, 45U, 45V, 45W, 45X, 45Y, 45Z, and 48E of the

Internal Revenue Code. The IRA modified or extended existing energy tax credits in Sections 25C, 25D, 30C, 30D, 40,

40A, 45, 45L, 45Q, 48, and 48C, and also modified the 179D tax deduction for energy efficient commercial buildings.

(The Section 48C credit, which has “capped” funding, was also given new allocations; see the 48C entry in Table 1 for

more information.)

2 See CRS Report R47202, Tax Provisions in the Inflation Reduction Act of 2022 (H.R. 5376), coordinated by Molly F.

Sherlock, pp. 24-27. The 10-year timeframe refers to FY2022-FY2031. The reinstatement of the Hazardous Substance

Superfund—which is classified as neither a tax credit nor a deduction, and is not counted toward the $271 billion

estimate—was estimated to raise $12 billion over the FY2022-FY2031 timeframe.

3 The other major sources of federal revenue—payroll taxes, estate taxes, and gift taxes—do not contain any energyspecific provisions. For an overview of the federal tax system, see CRS Report R45145, Overview of the Federal Tax

System in 2022, by Molly F. Sherlock and Donald J. Marples.

4 The cost estimates are generally tax expenditure estimates, as provided in Joint Committee on Taxation, Estimates Of

Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-29, December 7, 2023. These estimates reflect tax

laws enacted through August 31, 2023, and assume that temporary provisions expire as scheduled.

Congressional Research Service

1

Energy Tax Provisions: Overview and Budgetary Cost

Direct (Cash) Payments

Business tax credits have traditionally been nonrefundable, meaning that if a business’s tax

credits exceed its tax liabilities, the difference cannot be received as a refund. For example, if a

business has an income tax bill of $10,000 but is eligible for credits worth $14,000, those credits

reduce the business’s income tax payments to $0 but do not result in a federal refund for the

remaining $4,000.

Nonrefundable tax credits may have little to no effect on untaxed entities such as nonprofits, local

governments, and school districts. Because these entities do not pay federal income taxes, they

implicitly cannot benefit from nonrefundable tax credits. To incentivize greater “clean” energy

investments, the IRA allows certain untaxed entities to receive direct cash payments in place of

the IRC Sections 30C, 45, 45Q, 45U, 45V, 45W, 45X, 45Y, 45Z, 48, 48C, and 48E tax credits.

The entities eligible for direct payments include

•

•

•

•

•

•

any private-sector entity exempt from federal income taxes, including 501(c)(3)

organizations such as hospitals, private colleges, and think tanks;

state governments and political subdivisions thereof (including city governments,

county governments, and school districts);

the Tennessee Valley Authority;

Indian tribal governments;

Alaska Native Corporations; and

rural electricity cooperatives.

Organizations which are not tax-exempt entities can also claim direct payments in place of the

credits for carbon oxide sequestration (IRC §45Q), clean hydrogen production (IRC §45V), and

advanced manufacturing production (IRC §45X). However, they may only do so for five years,

starting with the year a facility is placed in service. This election cannot be made after December

31, 2032.

Credit Transfers

Entities not eligible for direct payments may transfer any of the tax credits listed in the previous

section, with the exception of the credit for qualified commercial clean vehicles (IRC §45W).

Credit transfers occur when one business sells its credits to another at an agreed-upon price in

exchange for a cash payment.

Such transfers hold two potential benefits for firms. First, businesses can sell their credits for a

price between the credit’s maximum value and the business’s income tax liabilities. For example,

if a firm owes $4,000 of federal income taxes but has a credit worth $7,000, it could sell the credit

to a second firm for $6,000. In this example, the first firm gains $2,000 (because it pays an

additional $4,000 in taxes but receives $6,000 in cash), while the second firm gains $1,000

(because it buys the credit for $6,000 but reduces its tax payments by $7,000).5 While traditional

credits are only claimed when firms file their taxes, transfers may occur at any time. Businesses

in need of quick cash can sell their credits instead of taking out loans, which is especially

important during periods of high interest rates.

5 This example assumes that the second firm’s income tax liabilities equal or exceed $7,000.

Congressional Research Service

2

Energy Tax Provisions: Overview and Budgetary Cost

Under proposed IRS regulations, if a firm is deemed ineligible for a credit it has already sold, the

liability falls on the purchaser of the credit.6 This could cause transferable credits to trade at less

than their full dollar value if the purchasers of such credits factor these potential losses into their

buying decisions.

In 2023, transferred tax credits typically sold at 89 to 95 cents on the dollar.7 It is not yet clear

how much of the difference between the tax credits’ sales prices and their maximum potential

values was attributable to liability concerns, the preference for immediately available cash, or

other factors.

The clean vehicle credit (IRC §30D) and the used clean vehicle credit (IRC §25E) are eligible for

a special type of credit transfer from consumers to car dealers. Such transfers are discussed in the

Sections 30D and 25E entries in Table 3.

6 Internal Revenue Service, “Section 6418 Transfer of Certain Credits,” REG-101610-23, pp. 40496-40526, June 21,

2023.

7 Crux, Transferable Tax Credit Market Intelligence Report, New York, NY, January 16, 2024, pp. 44-47,

https://www.cruxclimate.com/2023-market-report.

Congressional Research Service

3

Table 1. Renewable Energy Tax Incentives

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Residential clean

energy credit (IRC

§25D)

A tax credit for the purchase of solar electric property, solar water

heating property, fuel cells, geothermal heat pump property, battery

storage property, or small wind energy property. The tax credit is

30% of the cost of qualifying property through 2032. The tax credit

is reduced to 26% for property placed in service in 2033 and 22%

for property placed in service in 2034. The tax credit for fuel cells is

limited to $500 for each 0.5 kilowatt of capacity.

For more, see CRS Insight IN12051, Residential Energy Tax Credits:

Changes in 2023

Energy Policy

Act of 2005

(EPACT05;

P.L. 109-58)

Property placed in

service by December

31, 2034.

FY2023-FY2027: $13.1

Renewable electricity

production tax credit

(PTC) (IRC §45)

A tax credit for electricity produced using qualifying renewable

energy resources. For facilities placed in service prior to 2022, the

2023 tax credit equals 2.8 cents per kWh for electricity produced

from wind, closed-loop biomass, and geothermal energy and 1.3

cents per kWh for electricity produced from open-loop biomass,

landfill gas, trash combustion, qualified hydropower, and marine and

hydrokinetic sources. The tax credit is available for 10 years after

the date the facility is placed in service. Taxpayers may elect to

receive an investment tax credit (ITC) in lieu of the PTC.

For facilities placed in service after December 31, 2021, and the

construction of which begins before January 1, 2025, the 2023 base

credit is 0.55 cents per kWh from wind, closed-loop biomass,

geothermal energy, and solar energy, and 0.3 cents per kilowatt

hour on the sale of electricity produced from the qualified energy

resources of open-loop biomass, landfill gas, trash, qualified

hydropower, and marine and hydrokinetic renewable energy. The

base credit is increased five times for facilities that meet prevailing

wage and apprenticeship requirements during the construction

phase and the first 10 years of operation. Facilities can increase the

credit by 10% for meeting certain domestic content standards.

Facilities located in energy communities can be eligible for a 10%

increase in the credit. Certain organizations, generally tax-exempt

entities including state and local governments and Indian tribal

governments, may claim the tax credit as “direct pay,” while other

entities may elect a one-time transfer of the tax credit. Taxpayers

Energy Policy

Act of 1992

(EPACT92;

P.L. 102-486)

Construction must

begin by December

31, 2025.

FY2023-FY2027: $39.3

CRS-4

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

may elect to receive an investment tax credit (ITC) in lieu of the

PTC. For facilities financed with tax-exempt bonds, the credit

amount would be reduced by the lesser of (1) 15%; or (2) the

fraction of the proceeds of a tax-exempt obligation used to finance

the project over the aggregate amount of the project’s financing

costs.

Advanced

manufacturing

production credit

(IRC §45X)

CRS-5

A business tax credit for the domestic production and sale of

qualifying solar and wind components. The amount of the credit

depends upon the specific solar or wind component. For wind

energy components, the credit amount would be 10% of the sales

price if the component is an offshore wind vessel. A credit of 10%

would also be available for the production of critical minerals.

The credit phases out ratably over four years for components sold

after December 31, 2029. The phaseout does not apply to the

production of critical minerals.

The credit cannot be claimed for components produced at a facility

for which a credit was claimed under Section 48C.

Inflation

Reduction

Act (P.L. 117169)

Eligible components

sold no later than

December 31, 2032.

FY2023-FY2027: $72.7

Enacting

Legislation

Description

Energy investment tax

credit (ITC) (IRC §48)

A tax credit for investments in qualifying energy property. The base

credit rate is 6% for investment in geothermal, microturbine, energy

storage technology, qualified biogas property, and microgrid

controller property, or combined heat and power (CHP) property

and 2% in the case of microturbine property. The increased credit

rate is 30% (10% in the case of microturbine property) with respect

to energy projects that have a maximum output of less than 1

megawatt of electrical (alternating current) or thermal energy and

for energy projects that meet certain prevailing wage and

apprenticeship requirements. Facilities can increase the credit by 2

percentage points (10 percentage points for projects that meet

domestic content requirements to certify that certain steel, iron,

and manufactured products used in the facility were domestically

produced). Facilities located in energy communities can be eligible

for an increase of 2 percentage points (10 percentage points for

projects that meet wage and workforce requirements). Certain

organizations, generally tax-exempt entities including state and local

governments and Indian tribal governments, may claim the tax

credit as “direct pay,” while other entities may elect a one-time

transfer of the tax credit. For facilities financed with tax-exempt

bonds, the credit amount is reduced by the lesser of (1) 15%; or (2)

the fraction of the proceeds of a tax-exempt obligation used to

finance the project over the aggregate amount of the project’s

financing costs.

Energy Tax

Act of 1978

(P.L. 95-618)

Construction must

begin by December

31, 2024, except for

geothermal and solar,

where there is a

permanent 10% credit.

For offshore wind

property,

construction must

begin by December

31, 2025.

FY2023-FY2027: $89.7

Solar: $72.6

Interchange Property: $8.0

Section 45 Property: $7.9

Credit for investment

in advanced energy

property (IRC §48C)

A competitively awarded tax credit for investments in selected

advanced energy property. The base credit rate is 6%, with an

increased 30% credit rate allowed for projects meeting prevailing

wage and registered apprenticeship requirements. A total of $10.0

billion is allocated for advanced energy property investment tax

credits, $4.0 billion of which must be deployed in energy

communities or communities that have not previously received tax

credits under this section. Certain organizations, generally taxexempt entities including state and local governments and Indian

tribal governments, may claim the tax credit as direct pay, while

other entities may elect a one-time transfer of the tax credit.

American

Recovery and

Reinvestment

Act (ARRA;

P.L. 111-5)

Allocation limit; $10

billion.

FY2023-FY2027: de minimis

CRS-6

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Provision

Enacting

Legislation

Provision

Description

Credit for holders of

clean renewable

energy bonds (IRC

§§54, 54C)

An income tax credit for holders of the bond. Clean Renewable

Energy Bonds (CREBs) are subject to a volume cap of $1.2 billion

with a credit rate set to allow the bond to be issued at par and

without interest. New Clean Renewable Energy Bonds (New

CREBs) are subject to a volume cap of $2.4 billion with a credit rate

set at 70% of what would permit the bond to be issued at par and

without interest. Tax credit bonds were repealed in the 2017 tax

revision (commonly called the “Tax Cuts and Jobs Act” [TCJA]; P.L.

115-97).

EPACT05

(P.L. 109-58)

Depreciation recovery

periods for energyspecific items: fiveyear MACRS for

certain energy

property (IRC

§168(e)(3)(B)(vi))

Accelerated depreciation allowances are provided under the

modified accelerated cost recovery system (MACRS) for

investments in certain energy property. Specifically, for property

placed in service prior to January 1, 2024, certain solar, wind,

geothermal, fuel cell, microturbine, CHP, waste energy recovery,

and biomass property have a five-year recovery period. For

property placed in service after December 31, 2024, qualified

property includes any property which is a qualified investment, and

any energy storage technology, as those terms are defined for

purposes of the clean electricity production and clean electricity

investment credits. Qualified properties have a five-year recovery

period.

Tax Reform

Act of 1986

(P.L. 99-514)

CRS-7

Energy

Improvement

and Extension

Act of 2008

(P.L. 110-343)

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Allocation limit;

authority to issue

repealed in P.L. 11597.

FY2023-FY2027: de minimis

None

FY2023-FY2027: $0.5

Provision

Clean electricity

production credit

(IRC §45Y)

CRS-8

Description

A tax credit for electricity produced using qualifying non-emitting

energy resources for the sale of domestically produced electricity

with a greenhouse gas emissions rate not greater than zero. To

qualify for a tax credit, electricity would need to be produced at a

qualifying facility placed in service after December 31, 2024.

The base PTC amount was set to 0.3 cents per kWh in 1992 dollars

and is adjusted for inflation. The tax credit amount is multiplied by

five for facilities that pay prevailing wages and meet registered

apprenticeship requirements. Facilities with a maximum net output

of less than 1 megawatt would also qualify for the full 1.5 cents per

kWh amount. The PTC would be available for electricity produced

during the facility’s first 10 years of operation. Facilities can increase

the credit by 10% for meeting certain domestic content standards.

Facilities located in energy communities are eligible for a 10%

increase in the credit. The ability to claim the credit as direct pay

would be subject to meeting domestic content requirements.

The emissions target phaseout would begin after the calendar year

in which greenhouse gas emissions from the electric power sector

are equal to or less than 25% of 2022 electric power sector

emissions. Once phaseout begins, the full credit amount would

remain available for facilities that begin construction the following

year. The credit amount for facilities beginning construction in the

second year would be 75% of the full credit amount. This would be

reduced to 50% for facilities beginning construction in the third

year, and zero afterward.

The provision would provide that for facilities financed with taxexempt bonds, the credit amount is reduced by the lesser of (1)

15%; or (2) the fraction of the proceeds of a tax-exempt obligation

used to finance the project over the aggregate amount of the

project’s financing costs.

Enacting

Legislation

Inflation

Reduction

Act (P.L. 117169)

Expiration Date

The later of 2032 or

once certain emissions

target levels achieved.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: no revenue

effect

Provision

Clean electricity

investment credit

(IRC §48E)

CRS-9

Description

A new clean electricity investment tax credit (ITC) for investment

in qualifying zero-emissions electricity generation facilities or energy

storage technology. Costs of qualified interconnection property are

also eligible for clean electricity projects smaller than 5 megawatts.

This credit is available for facilities and property placed in service

after December 31, 2024.

The base ITC amount is 6%, with the tax credit rate increased to

30% for facilities that pay prevailing wages and meet registered

apprenticeship requirements. Facilities with a maximum net output

of less than 1 megawatt and that begin construction less than 60

days after the Secretary of the Treasury publishes guidance on the

wage and registered apprenticeship requirements would also qualify

for the full 30% amount. The clean electricity ITC is increased by

one-third (2 percentage points or 10 percentage points) for

property placed in service in an energy community (as defined

above for the purposes of the clean electricity PTC). Similarly, a 2percentage point domestic content bonus also applies for the clean

electricity ITC; the bonus is increased to 10 percentage points if the

firm meets prevailing wage and apprenticeship requirements. The

ability to claim the credit as direct pay is subject to domestic

content requirements. The clean electricity ITC phases out

according to the same schedule as would apply to the clean

electricity PTC.

For facilities financed with tax-exempt bonds, the credit amount is

reduced by the lesser of (1) 15%; or (2) the fraction of the

proceeds of a tax-exempt obligation used to finance the project

over the aggregate amount of the project's financing costs.

This credit also allows for the annual allocation of 1.8 gigawatts for

“environmental justice solar and wind capacity” credits. Taxpayers

receiving a capacity allocation may be entitled to tax credits in

addition to otherwise allowed clean electricity ITCs. Specifically,

projects receiving an allocation that are located in a low-income

community or on Indian land are eligible for a 10-percentage point

bonus investment tax credit, while projects that are part of a lowincome residential building project or qualified low-income

economic benefit project are eligible for a 20-percentage point

bonus investment credit. Qualifying clean electricity projects include

Enacting

Legislation

Inflation

Reduction

Act (P.L. 117169)

Expiration Date

The later of 2032 or

once certain emissions

target levels achieved.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: $14.8

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

those with a nameplate capacity of 5 megawatts or less (other than

facilities producing electricity through combustion or gasification).

Facilities receiving an allocation are required to have the facility

placed in service within four years.

Sources: CRS analysis of the Internal Revenue Code; Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23,

December 7, 2023; CRS correspondence with the Joint Committee on Taxation.

Notes: IRC = Internal Revenue Code. kWh = kilowatt-hour. MACRS = modified accelerated cost recovery system. A de minimis tax expenditure is less than $250

million FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

CRS-10

Table 2. Energy Efficiency Tax Incentives

Enacting

Legislation

Description

Energy efficient home

improvement credit (IRC

§25C)

A 30% tax credit for qualified energy-efficiency improvements

and expenditures for residential energy property including

qualifying improvements to the building’s envelope (excluding

roofs but including windows and doors), the HVAC system,

furnaces, boilers, or stoves. The overall credit is generally

limited to an annual value of $1,200 per taxpayer and $600 per

item (with lower limits for certain items such as exterior

doors), though it can be as high as $2,000 for energy-efficient

water heaters, heat pumps, air conditioners, boilers, and

biomass stoves. Property must be installed in the taxpayer’s

principal residence. A credit of up to $150 is available for home

energy audits.

For more, see CRS Insight IN12051, Residential Energy Tax

Credits: Changes in 2023.

EPACT05

(P.L. 109-58)

Property placed in

service by

December 31,

2032.

FY2023-FY2027: $12.4

Credit for construction

of energy-efficient new

homes (IRC §45L)

A tax credit for eligible contractors for building and selling

qualifying energy-efficient new homes. For homes acquired

after 2021, the credit would be $2,500 if the home meets

certain Energy Star efficiency standards and $5,000 if the home

is certified as a DOE Zero Energy Ready Home (ZERH). For

multifamily dwelling units, the credit is $500 per unit meeting

certain Energy Star efficiency standards and $1,000 per unit

meeting the DOE ZERH standards. The per-unit credit

amounts are increased to $2,500 and $5,000, respectively, if

the contractor pays its laborers and mechanics at or above

prevailing wage rates in the local construction sector.

EPACT05

(P.L. 109-58)

Property acquired

by December 31,

2032.

FY2023-FY2027: $1.1

Credit for holders of

qualified energy

conservation bonds (IRC

§54D)

The federal government has authorized the issue of $3.2 billion

in Qualified Energy Conservation Bonds (QECBs). QECBs

provide a tax credit worth 70% of the tax credit bond rate

stipulated by the Secretary of the Treasury. QECBs issued by

state and local governments must fund an energy-savings

project, such as the green renovation of a public building, R&D

in alternative fuels, and public transportation projects. The

ability to issue new tax credit bonds was repealed in the 2017

tax revision (TCJA; P.L. 115-97).

Energy

Improvement

and Extension

Act of 2008

(P.L. 110-343)

Allocation limit

(allocated to the

states); authority to

issue repealed in

P.L. 115-97.

FY2023-FY2027: de minimis

CRS-11

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Provision

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Exclusion of energy

conservation subsidies

provided by public

utilities (IRC §136)

Subsidies provided by public utilities to customers for the

purchase or installation of energy conservation measures are

excluded from taxable income. For the purposes of this

provision, public utilities are entities selling electricity or

natural gas.

EPACT92

(P.L. 102-486)

None

FY2023-FY2027: de minimis

Exclusion of interest on

state and local qualified

private activity bonds for

green buildings and

sustainable design

projects (IRC

§142(a)(14))

Tax-exempt private activity bonds can be issued to finance (or

refinance) qualified green building and sustainable design

projects.

American

Jobs Creation

Act of 2004

(P.L. 108-357)

Does not apply to

any bond issued

after September 30,

2012.

FY2023-FY2027: de minimis

Energy-efficient

commercial buildings

deduction (IRC §179D)

Businesses may deduct the cost of energy efficient commercial

building property installed or placed in service during the

taxable year. Qualifying energy-efficient commercial building

property includes property installed as part of (1) the interior

lighting system; (2) the heating, cooling, ventilation, or hot

water system; or (3) the building envelope. Qualifying property

must reduce the building’s annual energy and power costs by at

least 25% relative to a reference building. The maximum

deduction is equivalent to 50 cents per square foot of the

building, with an additional 2 cents per square foot for every

additional percentage point of energy and power cost

reduction above 25%, up to a maximum of $1.00 per square

foot, less the sum of the amounts deducted over the previous

three years. For firms meeting prevailing wage and registered

apprenticeship standards, the maximum deduction ranges from

$2.50 to $5.00 per square foot of the building.

An alternative deduction available under §179D(f) allows

buildings engaged in qualified retrofit plans to deduct the

adjusted basis in the retrofitted property. To qualify, the

building must be at least five years old, and the qualified retrofit

plan must reduce the building’s energy use intensity by at least

25%. Both the standard §179D deduction and the alternative

§179D(f) are adjusted for inflation after taxable year 2022. Tax-

EPACT05

(P.L. 109-58)

none

FY2023-FY2027: de minimis

CRS-12

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

exempt organizations making energy-efficiency upgrades may

transfer the deductible amount to the property designer.

Sources: CRS analysis of the Internal Revenue Code, and Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23,

December 7, 2023.

Notes: IRC = Internal Revenue Code. A de minimis tax expenditure is less than $250 million in FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

CRS-13

Table 3. Tax Incentives for Vehicles and Vehicle Infrastructure

Provision

Description

Credits for other

alternative fuel vehicles

(IRC §30B)

Tax credits were previously available for purchases of advanced

lean burn technology motor vehicles, qualified hybrid motor

vehicles, and qualified alternative fuel motor vehicles. The

credits applied to four-wheeled vehicles and could be claimed

by both individuals and businesses. Credits claimed by

businesses could be carried forward up to 20 years (allowing

for potential future revenue losses). A credit could be claimed

by the seller (rather than the purchaser) if a vehicle was sold to

a tax-exempt entity such as a local government. For all

qualifying vehicles, the taxpayer must have acquired the vehicle

for use or lease, and original use of the vehicle must have

commenced with the taxpayer.

For advanced lean burn technology passenger vehicles (PVs)

and lightweight trucks (LWTs), hybrid PVs, and hybrid LWTs, a

tax credit of up to $2,400 was available based on the given

vehicle’s fuel economy. A supplementary conservation credit

for lifetime fuel savings of up to $1,000 was also available. For

hybrid vehicles other than PVs and LWTs, a credit was available

based on the car’s fuel economy and incremental cost. Hybrid

vehicles used to claim the §30B credit could not be used to

claim the §30D credit. The credits phased out during the four

calendar quarters after a manufacturer had sold 60,000 hybrid

vehicles or 60,000 advanced lean burn technology vehicles.

A tax credit was also available for purchases of qualified

alternative fuel motor vehicles. The credit was worth up to

50% or 80% of the vehicle’s incremental cost, with maximum

values of $5,000 for lightweight vehicles and $40,000 for the

heaviest vehicles. (The caps scaled up according to vehicle

weight.) Incremental cost was defined as the excess of

manufacturer suggested retail price (MSRP) over the price of a

gas- or diesel-powered car of the same model. Partial credits

were available for vehicles relying on a mix of petroleum-based

fuel and alternative fuel. (The MSRP is the price suggested by

the manufacturer and may differ from the price paid by the

taxpayer.)

CRS-14

Enacting

Legislation

EPACT05

(P.L. 109-58)

Expiration Date

Hybrid vehicles,

excluding passenger

vehicles and light

trucks: Vehicle

purchased no later

than 12/31/2009.

New advanced lean

burn technology

motor vehicles, new

qualified alternative

fuel vehicles, hybrid

passenger vehicles,

and hybrid light

trucks: Vehicle

purchased no later

than 12/31/2010.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: de minimis

Provision

Description

Credit for qualified

commercial clean vehicles

(IRC §45W)

The credit for qualified commercial clean vehicles, also known

as the commercial clean vehicle credit, reduces tax payments

for businesses and tax-exempt organizations purchasing electric

vehicles, hybrid vehicles, and fuel cell vehicles. Vehicles must be

made by qualified manufacturers and must have been purchased

for use or lease, not for resale. Eligible commercial vehicles

must be subject to a depreciation allowance, unless they are

purchased by tax-exempt organizations for use (not for lease).

The depreciable basis for commercial clean vehicles must be

reduced by the amount of the §45W credit. Qualifying vehicles

cannot have previously received a §30D clean vehicle credit,

nor may a vehicle be used to claim more than one §45W credit

over its lifetime. Hybrid and electric vehicles must have battery

capacity of at least 7 kilowatt hours if the vehicle’s gross vehicle

weight rating (GVWR) is less than 14,000 pounds, or a battery

capacity of at least 15 kilowatt hours if the vehicle’s GVWR is

14,000 pounds or more.

For hybrid vehicles, the credit equals the lesser of the

incremental cost of the vehicle or 15% of the vehicle’s cost

basis. For electric vehicles and fuel cell vehicles, the credit

equals the lesser of the incremental cost of the vehicle or 30%

of the vehicle’s cost basis. A vehicle’s incremental cost is

defined as the additional cost for an electric, hybrid, or fuel cell

vehicle, as compared with a gas- or diesel-fueled vehicle of

similar size and use. The credit may not exceed $40,000 for a

vehicle with a GVWR of 14,000 pounds or more, nor may it

exceed $7,500 for lighter-weight vehicles.

The commercial clean vehicle credit is nonrefundable, meaning

that taxpayers are not entitled to a refund if their tax credits

exceed their tax liabilities. However, any unused credits may be

carried forward to offset future tax liabilities. Tax-exempt

organizations are eligible to receive the credit as a direct

payment instead of as a nonrefundable tax credit.

For leased vehicles, the tax credit is generally received by the

vehicle’s owner rather than its lessee. Existing legal principles

are used to distinguish between a lease and a sale for tax

purposes. For example, if the lease agreement covers more

CRS-15

Enacting

Legislation

Inflation

Reduction

Act of 2022

(P.L. 117-169)

Expiration Date

Does not apply to

vehicles acquired

after 12/31/2032.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: $14.9

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

than 80% or 90% of the vehicle’s projected useful life, or if the

agreement requires the lessee to purchase the vehicle at the

end of the lease, then the lease agreement is deemed a sale for

tax purposes. Under these and other circumstances, the

vehicle’s owner is ineligible for the credit, but the lessee may

claim either the §45W credit or the §30D clean vehicle credit.

Used clean vehicle credit

(IRC §25E)

CRS-16

The used clean vehicle credit, also known as the previouslyowned clean vehicles credit, provides a tax credit for purchases

of used electric or fuel cell vehicles. The credit equals 30% of

the vehicle’s sales price up to a maximum value of $4,000.

Credits in excess of tax liabilities cannot be received as refunds,

nor can they offset future tax liabilities. To qualify for the

credit, both the purchaser (the taxpayer) and the vehicle must

meet certain criteria. Additional restrictions apply to credits

transferred from purchasers to dealers.

Individuals and couples are eligible for the credit; business

entities such as corporations and partnerships are not. The

taxpayer must purchase the vehicle for personal use, not for

resale, and cannot have claimed another used clean vehicle

credit in the three years prior to the date of purchase. In either

the year the vehicle is acquired or the year before, the

taxpayer’s modified adjusted gross income (MAGI) must be at

or below certain thresholds. The thresholds are $150,000 for

married couples, $112,500 for heads of household, and $75,000

for single filers and others.

To qualify for a credit, the vehicle must be purchased from a

licensed dealer for $25,000 or less. The dealer must produce a

report of the transaction for both the buyer and the IRS. The

vehicle must have a gross vehicle weight rating of less than

14,000 pounds, and used electric vehicles must have a battery

capacity of 7 kilowatt hours or more. In addition, the vehicle’s

model year must be at least two years before the year of

purchase; for example, used vehicles purchased in 2030 must

have model years of 2028 or earlier. Finally, the vehicle cannot

have been transferred to another qualified buyer after August

16, 2022, effectively limiting used credit claims to one per

vehicle. (Vehicle sales from the initial owner to a dealer, or

Inflation

Reduction

Act of 2022

(P.L. 117-169)

Does not apply to

vehicles acquired

after 12/31/2032.

FY2023-FY2027: de minimisb

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

from one dealer to another, do not violate the first transfer

rule.)

Rules for credit transfers under the used clean vehicle credit

are similar to those under the clean vehicle credit. Buyers can

claim the credit at the point of purchase, and dealers may

compensate buyers with a reduced down payment, a reduced

partial payment, or cash. The credit amount may exceed

taxpayers’ income tax liabilities, in effect making transferred

credits fully refundable. Buyers cannot transfer a partial credit

to the dealer, and credit amounts received by the dealer are

increased by 6.0445%. Dealers must inform buyers of the

relevant MAGI eligibility thresholds, and buyers must attest that

they expect to be eligible for the credit. Taxpayers who

transfer the used clean vehicle credit but exceed the income

limits must pay back the credit to the IRS when filing their

taxes. Finally, the transfer rules only apply to used vehicles

acquired between 2024 and 2032.

The used clean vehicle credit went into effect starting in 2023.

However, vehicles purchased in 2022 (or earlier) but acquired

after December 31, 2022, are eligible for the credit. The credit

does not apply to vehicles acquired by the taxpayer after

December 31, 2032.

Clean vehicle credit (IRC

§30D)

CRS-17

New fuel cell vehicles and plug-in electric vehicles placed in

service after 2022 may qualify for a “clean vehicle credit.”

Eligible vehicles must have been acquired on or before

December 31, 2032, have a gross vehicle weight rating of less

than 14,000 pounds, and have undergone final assembly in

North America. Qualifying plug-in electric vehicles are required

to have a battery capacity of 7 kilowatt-hours or more.

Individuals and businesses may claim the credit for at most one

vehicle per year. Original use of the vehicle must commence

with the taxpayer, and taxpayers must use or lease the vehicle;

vehicles purchased for resale are ineligible for the credit. The

vehicle’s MSRP cannot exceed $80,000 for vans, sport utility

vehicles, and pickup trucks, and cannot exceed $55,000 for

other vehicles.

Energy

Improvement

and Extension

Act of 2008

(P.L. 110343); section

modified and

retitled

“Clean

vehicle

credit” by the

Inflation

Reduction

Vehicle must be

placed in service on

or before

12/31/2032.

FY2023-FY2027: $19.0

Provision

Description

The credit amount is $3,750 for vehicles meeting the critical

minerals requirement and $3,750 for vehicles meeting the battery

components requirement, for a maximum total credit of $7,500.

To meet the former requirement, a car’s battery must have a

certain threshold percentage of “critical minerals that were

extracted or processed in a country with which the United

States has a free trade agreement, or recycled in North

America.” The threshold percentage is 40% in 2023, 50% in

2024, 60% in 2025, 70% in 2026, and 80% thereafter. To meet

the latter requirement, a certain share of a battery’s

component parts must be manufactured or assembled in North

America, with the share depending on the year the car is placed

in service. The share is 50% in 2023, 60% in 2024 and 2025,

70% in 2026, 80% in 2027, 90% in 2028, and 100% thereafter. In

addition, for vehicles placed in service after 2024, no applicable

critical minerals in the vehicle’s battery may come from a

“foreign entity of concern” (FEOC) as defined in 42 U.S.C.

§18741; vehicles placed in service after 2023 cannot use battery

components manufactured or assembled by an FEOC.

To qualify for the credit, modified adjusted gross income

(MAGI) for either the current or previous year must be at or

below $300,000 for married couples, $150,000 for single filers,

and $225,000 for heads of household. The credit is

nonrefundable, meaning that credits in excess of tax liabilities

are not refunded to the taxpayer.

Beginning in 2024, a buyer may elect to transfer the credit to

the dealer. As compensation for the transferred credit, qualified

dealers may compensate buyers with cash, a reduced down

payment on the vehicle, or a reduced partial payment on the

vehicle. The transferred credit may exceed the taxpayer’s

income tax liabilities, in effect making transferred credits fully

refundable. Buyers are not allowed to transfer partial credits,

and credits transferred to eligible dealers are increased by

6.0445%. Taxpayers who transfer the credit at the time of

purchase must still file tax form 8936 and indicate that they

used the clean vehicle credit earlier in the year. Dealers must

inform consumers of the MAGI thresholds at the time

CRS-18

Enacting

Legislation

Act of 2022

(P.L. 117-169)

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

Provision

Description

Enacting

Legislation

Expiration Date

EPACT05

(P.L. 109-58)

Property purchased

by 12/31/2021.

Cost or Tax Expenditure

Estimate (billions)a

taxpayers elect to transfer their credits, and taxpayers must

attest to the dealer that they expect to be below the income

threshold for their filing status. Taxpayers who transfer the

credit but exceed the MAGI limits must pay back the credit (to

the IRS) when filing their taxes.

Vehicles placed in service before April 18, 2023, are not subject

to the critical minerals requirement or the battery components

requirement. Consumers who purchased a vehicle before April

18, 2023, but took possession of it after that date are still

subject to the requirements. For vehicles placed in service

between January 1, 2023, and April 17, 2023, the minimum

credit for vehicles with a battery capacity of at least 7 kilowatt

hours is $3,751, with an additional $417 available for each

additional kilowatt hour, up to a maximum credit of $7,500.

For new plug-in electric vehicles purchased before 2023, the

minimum credit is $2,917 for vehicles with battery capacities of

at least 5 kilowatt hours, with an additional $417 for each

additional kilowatt hour, up to a maximum of $7,500. If a plugin electric vehicle was purchased and received by the taxpayer

between August 7, 2022, and December 31, 2022, the vehicle

must have undergone final assembly in North America.

Credit for fuel cell

vehicles (IRC §30B)

CRS-19

A previously available tax credit for fuel cell vehicles. Fuel cell

vehicles received a base credit of $4,000 for vehicles weighing

less than 8,500 pounds. Heavier vehicles qualified for up to a

$40,000 credit. An additional credit of up to $4,000 was

available for cars and light trucks that exceeded the 2002 base

fuel economy.

The credit for fuel cell vehicles is no longer available. Certain

qualifying fuel cell vehicles are eligible for an IRC §30D clean

vehicle credit beginning in 2023.

FY2023-FY2027: de minimis

Provision

Description

Alternative fuel vehicle

refueling property credit

(IRC §30C)

A tax credit for the cost of qualified alternative fuel vehicle

refueling property at a business or at a taxpayer’s principal

residence. Costs for vehicle charging equipment—including

bidirectional charging equipment and charging stations for

electric motorcycles (two- and three-wheeled electric vehicles)

intended for use on public roads—are eligible for the credit.

The credit is equal to 30% of qualifying costs for personal

property (property not subject to depreciation), up to a

maximum value of $1,000. For depreciable business property,

the credit is equal to 30% of costs if the firm meets prevailing

wage and qualified apprenticeship requirements, and is 6% if the

firm does not meet such requirements. The credit for

depreciable business property is limited to $100,000 per item

of property. For property installed before January 1, 2023, the

maximum total credit value is $30,000 for depreciable business

property and $1,000 for personal property.

Starting in 2023, property is only eligible for the credit if it is

installed in either a nonurban or a low-income census tract.

Any census tract not classified as an “urban area” by the

Secretary of Commerce in the most recent decennial census

qualifies for the credit. To qualify as a “low-income

community,” census tracts must meet one of five criteria. First,

all census tracts with a poverty rate of 20% or higher qualify for

the credit. Second, census tracts located in metropolitan areas

qualify for the credit if median family income in the tract does

not exceed 80% of either statewide median family income or

metropolitan area median family income, whichever is greater;

census tracts located in nonmetropolitan areas are eligible if

median family income does not exceed 80% of statewide

median family income. Third, subject to regulations established

by the Secretary of the Treasury, targeted populations (within

the meaning of Section 103(20) of the Riegle Community

Development and Regulatory Improvement Act of 1994 (12

U.S. Code §4702(20)) may be treated as low-income

communities. Fourth, high-migration rural counties—defined as

counties which have lost 10% or more of their population due

to net out-migration over the 20-year period ending with the

CRS-20

Enacting

Legislation

EPACT05

(P.L. 109-58)

Expiration Date

Property placed in

service by

12/31/2032.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: $0.4

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

most recent census—are eligible for the credit if they are in

census tracts located in nonmetropolitan areas wherein median

family income does not exceed 85% of statewide median family

income. Fifth, census tracts with fewer than 2,000 people which

are located in empowerment zones (as designated under 26

U.S. Code §1391) and which border a “low-income community”

(as defined according to the criteria described here) are

classified as “low-income communities” as well. Census tracts

need only meet either the nonurban criterion or one of the five

low-income criteria for property to be eligible for the credit.

Credits for plug-in

electric vehicles and

electric motorcycles (IRC

§30D)

A tax credit was previously available for the purchase of

qualifying plug-in electric vehicles. The credit ranged from

$2,500 to $7,500 per vehicle, depending on the vehicle’s

battery capacity. The tax credit phased out once a vehicle

manufacturer had sold 200,000 qualifying vehicles. For vehicles

purchased by tax-exempt organizations, the seller of the vehicle

was able to claim the credit under certain circumstances.

A separate 10% credit, up to $2,500, was previously available

for the cost of two-wheeled plug-in electric vehicles (e.g.,

motorcycles). Eligible vehicles must have had a weight rating of

less than 14,000 pounds; have been propelled by a batterypowered electric motor with a battery capacity of at least 2.5

kilowatt-hours; been used or leased (not resold) by the

taxpayer; been used in the United States; been manufactured

for use on streets, roads, and highways; and been capable of

achieving a speed of at least 45 miles per hour. In addition,

original use of the motorcycle must have commenced with the

taxpayer.

Energy

Improvement

and Extension

Act of 2008

(P.L. 110-343)

ARRA (P.L.

111-5)

Credit for plug-in

electric vehicles

phased out and

replaced by the

“clean vehicle

credit.” See the

“Clean vehicle

credit (IRC §30D)”

entry in this table.

FY2023-FY2027: de minimis

Credit for electric

motorcycles:

Motorcycle

acquired on or

before 12/31/2021.

Sources: CRS analysis of the Internal Revenue Code; Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23; and

correspondence with the Joint Committee on Taxation.

Notes: IRC = Internal Revenue Code. A de minimis tax expenditure is less than $250 million in FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

b. The Joint Committee on Taxation did not include a cost estimate for the used clean vehicle credit in its most recent tax expenditures report (covering FY2023FY2027). The committee estimated that the credit would reduce federal revenues by $0.4 billion from FY2022 to FY2026 in its previous report. See Joint

Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2022-2026, JCX-22-22, December 22, 2022.

CRS-21

Table 4. Renewable and Alternative Fuels Tax Incentives

Provision

Clean fuel production

credit (IRC §45Z)

CRS-22

Description

Starting in 2025, producers registered with the IRS can claim a

tax credit for clean fuel produced in the United States or its

territories. Producers who sell clean fuel to other producers

for use in a fuel mixture are eligible for the credit.

The credit differs in value depending on the greenhouse gas

(GHG) emissions rate for the applicable fuel; the most

substantial credits are for zero-emission fuels. For producers

not meeting prevailing wage and apprenticeship requirements,

the credit has a maximum value of $0.20 per gallon of

nonaviation fuel and 35¢ per gallon of sustainable aviation fuel.

The maximum values rise to $1.00 and $1.75 per gallon,

respectively, for producers meeting prevailing wage and

qualified apprenticeship requirements. All maximum values are

adjusted annually for inflation.

For producers with nonzero emissions, the credit phases down

to zero as the fuel emissions factor rises to 50 kilograms of

CO2 per 1 million British Thermal Units (mmBTU). GHGs

other than CO2 are evaluated on a CO2-equivalent basis

depending on their relative contribution to global warming.

Producers cannot use the same production facility to claim

both the clean fuel production credit and the clean hydrogen

production credit (IRC §45V), the investment credit (IRC §48)

for a specified clean hydrogen facility, or the credit for carbon

oxide sequestration (IRC §45Q).

For more, see CRS In Focus IF12502, The Section 45Z Clean Fuel

Production Credit.

Enacting

Legislation

Inflation

Reduction

Act of 2022

(P.L. 117-169)

Expiration Date

Fuel sold by

12/31/2027.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: $6.7

Provision

Description

Sustainable aviation fuel

credit (IRC §40B)

Starting in 2023, certain taxpayers may claim tax credits for the

sale or use of “sustainable” aviation fuel. To be deemed

“sustainable,” such aviation fuel must reduce lifecycle GHG

emissions by at least 50% compared with petroleum-based jet

fuel. The credit starts at $1.25 per gallon, and there is a

supplementary credit amount of $0.01 for each percentage

point by which the GHG emissions reduction exceeds 50%.

(For example, the supplementary amount would be $0.30 for

aviation fuel which reduces emissions by 80% compared to

petroleum-based jet fuel.) The maximum combined value of the

baseline credit and the supplementary credit is $1.75 per gallon.

Taxpayers may use this credit to offset their excise tax

liabilities, offset their income tax liabilities, or receive payments.

All credit amounts are included in taxpayers’ gross income for

income tax purposes.

Additional requirements for being counted as sustainable

include the following: (1) aviation fuel must meet the

requirements of ASTM International Standard D7566, or the

Fischer Tropsch provisions of ASTM International Standard

D1655, Annex A1; (2) aviation fuel may not be derived from

coprocessing an applicable material (or materials derived from

an applicable material) with a feedstock which is not biomass;

and (3) fuel cannot be derived from palm fatty acid distillates or

petroleum. Producers or importers applying for the credit must

be registered with the Secretary of the Treasury under IRC

§4101.

Certain qualified fuel mixtures of kerosene and sustainable

aviation fuel may be eligible for the credit. To be counted as a

“qualified mixture,” the given mixture must be produced by the

taxpayer in the United States, be used by the taxpayer (or sold

by the taxpayer for use) in an aircraft, and be sold or used in

the ordinary course of a trade or business of the taxpayer. In

addition, the transfer of the mixture to the given aircraft fuel

tank must occur in the United States.

CRS-23

Enacting

Legislation

Inflation

Reduction

Act of 2022

(P.L. 117-169)

Expiration Date

Fuel not sold or

used after

12/31/2024.

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: de minimisb

Provision

Description

Credit for production of

clean hydrogen (IRC

§45V)

Taxpayers producing hydrogen at qualified clean hydrogen

production facilities may receive a credit based on the amount

of hydrogen produced, the lifecycle CO2 equivalent (CO2e)

emissions rate of the hydrogen through the point of production

(well-to-gate), and the taxpayer’s compliance with applicable

wage and apprenticeship requirements.

To be classified as a qualified clean hydrogen production facility,

a facility must be owned by the taxpayer, must produce

qualified clean hydrogen, and must have begun its construction

before January 1, 2033. Qualified clean hydrogen (QCH) cannot

have a lifecycle GHG emissions rate greater than 4 kilograms of

CO2e per kilogram of hydrogen through the point of

production. The production of QCH must occur in the United

States or its possessions, in the ordinary course of the

taxpayer’s trade or business, and for sale or use. The

production and sale or use of QCH must be verified by an

unrelated party. If a facility placed in service before January 1,

2023, did not produce qualified clean hydrogen at that time, but

is modified before January 1, 2033, to produce clean hydrogen,

and if those modifications are charged to the taxpayer’s capital

account, then the facility can qualify for the 45V credit.

The baseline credit is $0.60 per kilogram of QCH, adjusted

annually for inflation. Taxpayers producing QCH with lifecycle

GHG emissions below 0.45 kilograms of CO2e through the

point of production are eligible for the full baseline credit.

Taxpayers are eligible for 33.4% of the baseline credit if the

CO2e emissions rate is between 0.45 and 1.5 kilograms; 25% of

the baseline credit if the rate is between 1.5 and 2.5 kilograms;

and 20% of the baseline credit if the rate is between 2.5 and 4.0

kilograms. These credit amounts are multiplied by five for

producers meeting prevailing wage and qualified apprenticeship

requirements. Credits are only available during the first 10

years after the facility is placed in service.

For projects financed with tax-exempt bonds, the credit is

reduced by an amount equivalent to the share of financing

coming from such bonds, with a maximum reduction of 15%.

(For example, if 10% of project financing comes from tax-

CRS-24

Enacting

Legislation

Inflation

Reduction

Act of 2022

(P.L. 117-169)

Expiration Date

Facility construction

must begin before

01/01/2033

Cost or Tax Expenditure

Estimate (billions)a

FY2023-FY2027: $4.7

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

exempt bonds, the credit amount is reduced by 10%; if 25% of

its financing comes from tax-exempt bonds, the credit amount

is reduced by 15%.)

Clean hydrogen production facilities used to claim the §45V

credit cannot also be used to claim the energy investment tax

credit (in 2023 and 2024) or the credit for carbon oxide

sequestration (indefinitely).c

Second-generation biofuel

producer credit (IRC

§40(a)(4))

A per-gallon tax credit for qualified second-generation biofuel

production. The amount of the credit is generally $1.01 per

gallon. Qualifying fuels include cellulosic biofuel, which is

produced using lignocellulosic or hemicellulosic matter

(cellulosic feedstock) available on a renewable or recurring

basis, as well as second-generation biofuels, which include

cultivated algae, cyanobacteria, or lemna.

Food,

Conservation,

and Energy

Act of 2008

(P.L. 110-246)

Fuel produced

before 01/01/2025.

FY2023-FY2027: de minimis

Credits for biodiesel, agribiodiesel, renewable

diesel fuel, alternative

fuels, and alternative fuels

mixtures (IRC §§40A,

6426, & 6427)

There are three tax credits for biodiesel: the biodiesel mixture

credit, the biodiesel credit, and the small agri-biodiesel

producer credit. Each gallon of biodiesel, including agribiodiesel (biodiesel made from virgin oils), may be eligible for a

$1.00 tax credit. Additionally, an eligible small agri-biodiesel

producer credit of 10 cents is available for each gallon of

qualified agri-biodiesel production. The mixtures tax credit may

be claimed as an instant excise tax credit against the blender’s

fuel excise tax payments. Credits in excess of excise tax liability

may be refunded. The biodiesel and small agri-biodiesel credits

may be claimed as income tax credits.

Tax credits are also available for certain alternative fuels and

alternative fuels mixtures. There is a 50-cents-per-gallon excise

tax credit for certain alternative fuels used as fuel in a motor

vehicle, motor boat, or airplane, and a 50-cents-per-gallon

credit for alternative fuels mixed with a traditional fuel

(gasoline, diesel, or kerosene) for use as a fuel. Qualifying fuels

include liquefied petroleum gas; P Series fuels (certain

renewable, nonpetroleum, liquid fuels); compressed or liquefied

natural gas (CNG or LNG); any liquefied fuel derived from coal

or peat through the Fischer-Tropsch process that meets

American

Jobs Creation

Act of 2004

(P.L. 108-357)

Fuel sold, used, or

removed by

12/31/2024.

FY2023-FY2027: $6.4d

CRS-25

Safe,

Accountable,

Flexible,

Efficient

Transportatio

n Equity Act:

A Legacy for

Users

(SAFETEALU; P.L. 10959)

Provision

Description

Enacting

Legislation

Expiration Date

Cost or Tax Expenditure

Estimate (billions)a

certain carbon-capture requirements; compressed or liquefied

gas derived from biomass; and liquid fuel derived from biomass.

These credits will be replaced by the clean fuel production

credit beginning in 2025.

Sources: CRS analysis of the Internal Revenue Code; Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23,

December 7, 2023; Joint Committee on Taxation, Estimated Budget Effects Of The Revenue Provisions Of Title I – Committee On Finance, Of An Amendment In The Nature Of A

Substitute To H.R. 5376, “An Act To Provide For Reconciliation Pursuant To Title II Of S. Con. Res. 14,” As Passed By The Senate On August 7, 2022, And Scheduled For Consideration

By The House Of Representatives On August 12, 2022, JCX-18-22, August 9, 2022; and Joint Committee on Taxation, Estimated Budget Effects Of The Revenue Provisions

Contained In The House Amendment To The Senate Amendment To H.R. 1865, the Further Consolidated Appropriations Act, 2020, JCX-54R-19, December 17, 2019.

Notes: IRC = Internal Revenue Code. A de minimis tax expenditure is less than $250 million in FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

b. The Joint Committee on Taxation did not include cost estimates for the sustainable aviation fuel credit in its most recent tax expenditures reports (covering fiscal

years 2023-2027 and 2022-2026, respectively). The committee estimated that the credit would reduce federal revenues by $49 million from FY2022 to FY2026 in its

cost estimate of the Inflation Reduction Act of 2022. See Joint Committee on Taxation, Estimated Budget Effects Of The Revenue Provisions Of Title I – Committee On

Finance, Of An Amendment In The Nature Of A Substitute To H.R. 5376, “An Act To Provide For Reconciliation Pursuant To Title II Of S. Con. Res. 14,” As Passed By The Senate

On August 7, 2022, And Scheduled For Consideration By The House Of Representatives On August 12, 2022, JCX-18-22, August 9, 2022.

c. The energy investment tax credit (ITC) is authorized by IRC Section 48 in 2023 and 2024 and by IRC Section 48E beginning in 2025. Subsection (a)(15) of IRC

Section 48 prevents taxpayers from receiving both the ITC and the clean hydrogen production credit for the same clean hydrogen production facility, but no similar

provision is included in IRC Section 48E. However, the Secretary of the Treasury is required to issue guidance on IRC Subsection 48E no later than January 1, 2025,

and it is possible that the Secretary might address simultaneous receipt in the guidance. Firms might also be prevented from claiming the ITC and clean hydrogen

production credit for the same expenditures under the “double benefit rule.” For more information on the double benefit rule, see CRS Insight IN11378, IRS

Guidance Says No Deduction Is Allowed for Business Expenses Paid with Forgiven PPP Loans, by Sean Lowry and Jane G. Gravelle.

d. The income tax credit portion is de minimis.

CRS-26

Table 5. Fossil Fuels Tax Incentives

Enacting

Legislation

Provision

Description

Enhanced oil recovery

(EOR) credit (IRC §43)

A tax credit for Enhanced Oil Recovery (EOR) costs available

when oil prices are below a certain threshold. The credit amount

is 15% of qualified domestic EOR costs. The EOR credit phases

out over a $6 range once oil’s reference price exceeds $28 per

barrel (adjusted for inflation after 1991; $52.10 in 2022). The EOR

credit was fully phased out every year from 2006 through 2015.

Low oil prices led to the full EOR credit becoming available in

2016, 2017, and 2021. A partial credit was available for 2018, but

it was fully phased out in 2019, 2020, and 2022.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences;

and CRS Insight IN11381, Low Oil Prices May Trigger Certain Tax

Benefits, but Not Others.

Omnibus

Budget

Reconciliation

Act of 1990

(P.L. 101-508)

None

FY2023-FY2027: de minimis

Coal production credits:

Refined coal and Indian

coal (IRC §45)

A tax credit for Indian coal produced from reserves that were

owned by an Indian tribe or held in trust by the United States for

a tribe on June 14, 2005. The amount of the credit is $2.00 per

ton (adjusted for inflation; $2.60 per ton in 2021). Tax credits

were also available for refined coal produced at refined coal

production facilities placed in service after the date of the

enactment of the American Jobs Creation Act of 2004 and before

January 1, 2012. The amount of the credit was $4.375 per ton

(adjusted for inflation to $7.38 in 2021.)

EPACT05

(P.L. 109-58)

Coal produced by

12/31/2021

FY2023-FY2027: de minimis

CRS-27

Expiration Date

Costa

Enacting

Legislation

Provision

Description

Credit for producing oil

and gas from marginal

wells (IRC §45I)

A tax credit for producing oil and gas from marginal wells,

available when oil and gas prices are below certain thresholds. The

base credit amount, in 2004 prices, is $3 per barrel of qualified

crude oil and 50 cents per 1,000 cubic feet (mcf) of qualified

natural gas. These values are adjusted for inflation every year. The

base credit amounts were $4.50 per barrel of qualified crude oil

and $0.75 per mcf of natural gas in 2023.

The credit starts phasing out if the reference prices, in 2023

dollars, exceed $22.49 per barrel of oil or $2.50 per mcf of

natural gas for the preceding year adjusted for inflation. The credit

is fully phased out if the reference price exceeds $18 per barrel or

$2.00 per mcf in 2004 dollars ($26.99 for oil and $2.99 for gas in

2023).

The credit for crude oil has never been triggered. For natural gas,

a partial credit was available in 2016, 2017, and 2019, and the full

credit was available in 2020 and 2021; no credit was available in

2022 or 2023. The §45I and §45K credits cannot be claimed for

the same well.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences;

and CRS Insight IN11381, Low Oil Prices May Trigger Certain Tax

Benefits, but Not Other.

American

Jobs Creation

Act of 2004

(P.L. 108-357)

None

FY2023-FY2027: de minimis

Safe harbor from

arbitrage rules for

prepaid natural gas (IRC

§148(b)(4))

This provision allows tax-exempt bonds to be used to finance

prepaid natural gas contracts without applying otherwise

applicable arbitrage rules.

EPACT05

(P.L. 109-58)

None

Not available.

CRS-28

Expiration Date

Costa

Enacting

Legislation

Provision

Description

Amortization of

geological and

geophysical expenditures

associated with oil and

gas exploration (IRC

§167(h))

Geological and geophysical (G&G) expenditures are costs

associated with determining the location and potential size of a

natural resource or mineral deposit. Generally, these costs are

viewed as capital costs, and as such would be recovered over the

same time frame as other capital costs. Most producers amortize

G&G expenditures over two years. Major integrated oil

companies amortize G&G expenditures over seven years. A major

integrated oil company, as defined in statute, has (1) average daily

worldwide production of crude oil of at least 500,000 barrels; (2)

gross receipts in excess of $1 billion in its tax year ending during

2005; and (3) at least 15% ownership interest in a crude oil

refinery.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences.

EPACT05

(P.L. 109-58)

None

FY2023-FY2027: $0.7

Seven-year MACRS

Alaska natural gas

pipeline (IRC

§168(e)(3)(C)(iii))

A seven-year MACRS recovery period is provided for any natural

gas pipeline system located in the State of Alaska that has a

capacity of more than 500 billion BTU of natural gas per day.

American

Jobs Creation

Act of 2004

(P.L. 108-357)

None

FY2023-FY2027: de minimis

Seven-year MACRS for

natural gas gathering lines

(IRC §168(e)(3)(C)(iv))

Natural gas gathering lines are treated as 7-year property. A

natural gas gathering line consists of the pipe, equipment, and

appurtenances determined to be a gathering line by the Federal

Energy Regulatory Commission (FERC) or a gathering line used to

deliver natural gas to a gas processing plant, an interconnection

with a transmission pipeline, or an interconnection with a local

distribution company, a gas storage facility, or an industrial

consumer.

EPACT05

(P.L. 109-58)

None

Not available.

15-year MACRS

depreciation recovery

period for natural gas

distribution lines (IRC

§168(e)(3)(E)(vi))

A natural gas distribution line, the original use of which

commences with the taxpayer after April 11, 2005, and which is

placed in service before January 1, 2011, is treated as 15-year

property.

EPACT05

(P.L. 109-58)

12/31/2010 (line

must have been

placed in service by

this date)

FY2023-FY2027: $0.3

CRS-29

Expiration Date

Costa

Enacting

Legislation

Provision

Description

Amortization of air

pollution control facilities

(IRC §§169 and

291(a)(4))

Five-year (60-month) amortization applies to a “certified pollution

control facility” used in connection with a plant or other property

in operation before January 1, 1976, and to an “atmospheric

pollution control facility” placed in service after April 11, 2005,

and used in connection with an electric generation plant or other

property that is primarily coal fired. Seven-year (84-month)

amortization applies only to an “atmospheric pollution control

facility” placed in service after April 11, 2005, and used in

connection with an electric generation plant or other property

that is primarily coal fired and that was placed in operation after

December 31, 1975. If an election is made under §169 with

respect to any certified pollution control facility, the amortizable

basis of the facility is reduced by 20%.

EPACT05

(P.L. 109-58)

None

FY2023-FY2027: $0.3

Expensing of tertiary

injectants (IRC §193)

Taxpayers can deduct tertiary injectant expenses, other than

expenses for recoverable hydrocarbon injectants, in the year costs

are incurred.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences.

Crude Oil

Windfall

Profit Tax

Act of 1980

(P.L. 96-223)

None

FY2023-FY2027: de minimis

Expensing of intangible

drilling costs (IDCs) and

exploration and

development costs (IRC

§§263(c), 263A(c)(3),

291(b), 616, 617)

IDCs include expenses on items without salvage value (e.g., wages,

fuel, and drilling site preparations). Integrated oil and gas

producers (producers who also have substantial refining or retail

activities) must capitalize 30% of IDCs and then recover those

costs over a five-year period. The remaining 70% of IDCs can be

fully expensed (costs deducted in the year they are incurred).

Nonintegrated producers can fully expense IDCs. The election to

deduct intangible drilling and development costs applies to oil and

gas wells and to wells drilled for any geothermal deposit. For

mineral properties, exploration and development expenditures

are deductible as an expense in the year paid, as opposed to being

capitalized.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences.

1916

Treasury

regulation

(T.D. 45,

article 223);

codified in

1954 (P.L. 83591)

None

Oil and Gas

FY2023-FY2027: $3.3

CRS-30

Expiration Date

Costa

Other Fuels

FY2023-FY2027: de minimis

Enacting

Legislation

Provision

Description

Passive loss rules for

working interests in oil

and gas property (IRC

§469(c)(3))

Deductions from passive trade or business activities, to the extent

they exceed income from all such passive activities, generally may

not be deducted against other income (salary, interest, dividends,

and active business income). These passive activity loss rules are

not applicable to working interests in oil or gas property.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences.

Tax Reform

Act of 1986

(P.L. 99-514)

None

FY2023-FY2027: $0.1b

Percentage depletion

(IRC §§611, 613, and

613A)

Certain independent oil and gas producers (producers who are

not retailers or refiners) may elect to claim percentage depletion

as opposed to cost depletion. The percentage depletion allowance

is 15% of gross income from the property, not to exceed (1)

100% of taxable income from the property, and (2) 65% of the

taxpayer’s taxable income. Oil and gas producers may claim

percentage depletion on up to 1,000 barrels of average daily

production (or an equivalent amount of domestic natural gas).

Percentage depletion rates for other minerals range from 5% to

22%.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences.

Revenue Act

of 1926 (P.L.

69-20)

None

Oil and Gas

FY2023-FY2027: $3.8

Fossil fuel capital gains

treatment (IRC §631(c))

Certain sales of coal under royalty contracts qualify for taxation as

capital gains rather than ordinary income. Income from these sales

is taxed at the preferred 20% rate applied to capital gains, as

opposed to being taxed as ordinary income.

Revenue Act

of 1964 (P.L.

88-272)

None

Not available.

Exclusion of interest on

state and local

government qualified

private activity bonds for

energy production

facilities (IRC §142)

Interest income on state and local bonds used to finance the

construction of certain private energy facilities for a city and one

contiguous county, or two contiguous counties, is tax-exempt.

These energy facility bonds are classified as private activity bonds,

rather than as governmental bonds, because a substantial portion

of their benefits accrues to individuals or businesses rather than

to the general public. These bonds are subject to the state private

activity bond annual volume cap.

Revenue and

Expenditure

Control Act

of 1968 (P.L.

90-364)

None

FY2023-FY2027: de minimis

CRS-31

Expiration Date

Costa

Other Fuels

FY2023-FY2027: $0.6

Provision

Description

Exceptions for publicly

traded partnerships with

qualified income derived

from certain energyrelated activities (IRC

§7704)

Publicly traded partnerships are generally treated as corporations.

The exception from this rule occurs if at least 90% of its gross

income is derived from interest, dividends, real property rents, or

certain other types of qualifying income. Qualifying income

includes income derived from certain energy-related activities,

such as fossil fuel or geothermal exploration, development,

mining, production, refining, transportation, and marketing.

For more, see CRS In Focus IF11528, Oil and Gas Tax Preferences;

and CRS Report R41893, Master Limited Partnerships: A Policy

Option for the Renewable Energy Industry.

Enacting

Legislation

Revenue Act

of 1987 (P.L.

100-203)

Expiration Date

None

Costa

Other Energy Related Activities

FY2023-2027: $2.8

Exploration and Mining of Natural

Resources

FY2023-FY2027: $0.3

Sources: CRS analysis of the Internal Revenue Code; and Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23,

December 7, 2023.

Notes: IRC = Internal Revenue Code. MACRS = modified accelerated cost recovery system. A de minimis tax expenditure is less than $250 million in FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

b. Exceptions to the passive activity loss rules are not classified as tax expenditures by JCT. These estimates are from the Treasury Department. Treasury Department

tax expenditure estimates are available at https://home.treasury.gov/policy-issues/tax-policy/tax-expenditures. The cost estimate for this provision is $50 million

($0.05 billion) for FY2023-FY2027 and $100 million ($0.1 billion) for FY2023-FY2032. The estimate presented in this table has been rounded to the nearest tenth of

$1 billion (the nearest hundred million).

CRS-32

Table 6. Carbon Capture and Sequestration, Nuclear, and Other Tax Incentives

Enacting

Legislation

Provision

Description

Credit for production of

electricity from qualifying

advanced nuclear power

facilities (IRC §45J)

A tax credit for electricity produced from qualifying nuclear

facilities. The advanced nuclear production tax credit (PTC)

provides a 1.8 cent per kWh tax credit for electricity sold that

was produced at qualifying facilities. Criteria for qualifying

facilities include that they must use nuclear reactor designs

approved by the Nuclear Regulatory Commission after 1993.

Qualifying facilities can claim tax credits during the first eight

years of production. The credit is restricted to 6,000

megawatts (MW) of total electric generating capacity for all

qualifying facilities, with the 6,000 MW allocated by the Internal

Revenue Service (IRS). Taxpayers can claim no more than $125

million in tax credits per 1,000 MW of the allocated capacity in

any single year.

EPACT05

(P.L. 109-58)

Facilities placed in

service by January 1,

2021. The IRS is to

allocate unutilized

national megawatt

capacity after that

date.

FY2023-FY2027: de minimis

Advanced manufacturing

investment credit (IRC

§48D)

A 25% business tax credit for investments in advanced

manufacturing facilities. “Advanced manufacturing facilities” are

domestic facilities producing semiconductors or

semiconductor equipment. Businesses may elect to receive the

credit as a payment, in effect making the credit fully refundable.

Chips and

Science Act

(P.L. 117-167)

Construction of

qualifying property

must begin no later

than 12/31/2026.

FY2023-FY2027: $30.7

Exclusion of interest on

state and local

government private

activity bonds for qualified

carbon dioxide capture

facilities (IRC §142(a)(17))

Tax-exempt private activity bonds can be issued to finance

direct air capture facilities (as defined in IRC §45Q(e)(3)) and

eligible component parts used in industrial carbon dioxide

facilities for carbon capture.

Infrastructure

Investment

and Jobs Act

(P.L. 117-58)

None

Not available

CRS-33

Expiration Date

Costa

Provision

Description

Credit for carbon oxide

sequestration (IRC §45Q)

A tax credit for the capture and sequestration of carbon

emissions (including carbon dioxide and carbon monoxide).

For carbon capture equipment placed in service on or after

February 9, 2018, and before January 1, 2023, the credit is the

sum of (1) $40.89 in 2023 per metric ton of carbon oxide

captured that is not used as a tertiary injectant and placed in

secure geological storage, during the first 12 years following

the facility being placed in service; and (2) $27.61 in 2023 per

metric ton of carbon oxide captured that is used as a tertiary

injectant or other qualified uses, during the first 12 years

following the facility being placed in service.

For carbon capture equipment placed in service on or after

January 1, 2023, and that began construction prior to January

1, 2033, the credit is the sum of (1) $17 per metric ton of

carbon oxide that is not used as a tertiary injectant and placed

in secure geological storage, during the first 12 years following

the facility being placed in service ($36 for Direct Air Capture

[DAC]), increased to $85 ($180 for DAC) for facilities that

pay prevailing wages during the construction phase; and (2)

$12 per metric ton of carbon oxide captured that is used as a

tertiary injectant or other qualified uses ($26 for DAC),

increased to $60 ($130 for DAC) for facilities that pay

prevailing wages during the construction phase and during the

first 12 years of operation and meet registered apprenticeship

requirements. Amounts adjusted for inflation after 2026.

For more, see CRS In Focus IF11455, The Section 45Q Tax

Credit for Carbon Sequestration.

10-year MACRS for smart

electric distribution

property (IRC

§§168(e)(3)(D)(iii) and

168(e)(3)(D)(iv))

15-year MACRS for

certain electric

transmission property

CRS-34

Enacting

Legislation

Expiration Date

Costa

Energy

Improvement

and Extension

Act of 2008

(P.L. 110-343)

Construction must

begin by December

31, 2032.

FY2023-FY2027: $4.8

10-year property includes any qualified smart electric meter

and any qualified smart electric grid system. A smart electric

meter is a time-based meter and related communication

equipment. Smart electric grid systems include property that is

used as part of a system for electric distribution grid

communications, monitoring, and management.

Energy

Improvement

and Extension

Act of 2008

(P.L. 110-343)

None

FY2023-FY2027: $0.3

15-year property includes original-use electricity transmission

property that is used in the transmission of electricity for sale

at 69 or more kilovolts.

EPACT05

(P.L. 109-58)

None

FY2023-FY2027: $0.3

Enacting

Legislation

Provision

Description

Expiration Date

Costa

Zero-emission nuclear

power production credit

(IRC §45U)

A tax credit for electricity produced from qualifying zeroemissions nuclear facilities. Qualified nuclear power facilities

are taxpayer-owned facilities that use nuclear power to

generate electricity that did not receive an advanced nuclear

production tax credit allocation under Section 45J, and were

placed in service before August 16, 2022. The tax credit is

calculated as 0.3 cents per kWh. Taxpayers that meet

prevailing wage requirements are eligible for a tax credit of five

times the base amount per kWh (i.e., up to 1.5 cents per

kWh). Credits are reduced by a reduction amount, which is

16% of the excess of gross receipts from electricity produced

by the facility and sold over the product of 2.5 cents times the

amount of electricity sold during the taxable year. Thus, the

credit would phase down as annual average prices exceed 2.5

cents per kWh. Credit amounts and amounts in the reduction

amount formula would be adjusted for inflation

Inflation

Reduction

Act (P.L. 117169)

December 31, 2032

FY2023-FY2027: $10.1

Accelerated deductions

for nuclear

decommissioning costs

(IRC §468A)

An eligible taxpayer may deduct cash payments made by the

taxpayer to a nuclear decommissioning reserve fund, and

deduct the ratable portion of any special transfer to the fund,

even if under the applicable method of accounting the taxpayer

would typically claim the deduction in a later tax year.

Deficit

Reduction

Act of 1984

(P.L. 98-369)

None

FY2023-FY2027: de minimis

Special tax rate for

nuclear decommissioning

reserve funds (IRC

§468A(e)(2))

A special 20% tax rate for investments made by nuclear

decommissioning reserve funds.

Deficit

Reduction

Act of 1984

(P.L. 98-369)

None

FY2023-FY2027: de minimis

Sources: CRS analysis of the Internal Revenue Code; Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2023-2027, JCX-59-23,

December 7, 2023.

Notes: IRC = Internal Revenue Code. kWh = kilowatt-hour. MACRS = modified accelerated cost recovery system. A de minimis tax expenditure is less than $250

million in FY2023-FY2027.

a. This column provides Joint Committee on Taxation tax expenditure estimates for the provision, unless otherwise noted.

b. Internal Revenue Service, Inflation Adjustment Factor Issued for Sequestration Credit, IRS Notice 2020-40, June 15, 2020.

CRS-35

Energy Tax Provisions: Overview and Budgetary Cost

Author Information

Nicholas E. Buffie

Analyst in Public Finance

Donald J. Marples

Specialist in Public Finance

Acknowledgments

A previous version of this report was authored by Molly F. Sherlock.

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan

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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other

than public understanding of information that has been provided by CRS to Members of Congress in

connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not

subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in

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material from a third party, you may need to obtain the permission of the copyright holder if you wish to

copy or otherwise use copyrighted material.

Congressional Research Service

R46865 · VERSION 3 · UPDATED

36