CIRCLE Act
The CIRCLE Act would create a new tax credit, the Recycling Property Investment Credit (RPIC), designed to spur investment in recycling infrastructure and related equipment. A taxpayer can claim a credit equal to 30% of the basis of eligible recycling property placed in service, with additional rules for how “eligible property” is defined, special treatment for subsidized projects, and a domestic-content bonus that adds 10 percentage points if certain domestic-content requirements are met. The credit is part of the general investment credit and is subject to a phased-down schedule beginning in 2026, as well as rules preventing double benefits and requiring basis reduction for any used credit. The measure aims to modernize recycling capacity, expand domestically sourced recycled materials, and strengthen domestic recycling markets in order to raise the U.S. recycling rate toward targets like the EPA’s 50% goal for 2030.
Key Points
- 1Establishes the Recycling Property Investment Credit (RPIC) equal to 30% of the qualified investment in eligible recycling property, added to the investment tax credit framework (Section 46).
- 2Eligible property includes “qualified recycling property” (defined with reference to existing depreciation rules) and must have depreciation or amortization allowed; construction must be completed or original use must commence with the taxpayer.
- 3There is a Domestic Content Bonus: for certain qualified investments meeting domestic-content requirements, the credit amount increases by 10 percentage points.
- 4The credit is phased out over time: 100% of the base credit for investments placed in service between 2026 and 2032; then 80% (2033), 60% (2034), 40% (2035), 20% (2036), and 0% (2037 and later).
- 5Denial of double benefit and basis reduction: the RPIC cannot be claimed with other credits/deductions for the same property, and the property’s tax basis is reduced by the amount of the credit. Regulations and guidance would be issued to implement recordkeeping and reporting.