Battery Fire Prevention Act
Battery Fire Prevention Act would enact three interrelated policy provisions. First, it creates a new 30% nonrefundable tax credit for businesses that purchase battery detectors used in battery recycling. The credit applies to “qualified battery detector expenses,” defined as amounts paid for devices that use certain technologies (X-ray, artificial intelligence, RFID, or other proven tech) to detect batteries, with the device’s original use starting with the taxpayer and used in the taxpayer’s recycling business. The credit is part of the general business credit and includes anti-double-dip rules. It takes effect for taxable years beginning after December 31, 2025. Second, the bill imposes a 5% sales tax on the sale of batteries by manufacturers, producers, or importers, effective for sales after December 31, 2025. This revenue would fund a new Lithium Battery Buy-Back Trust Fund, which would be used by the Department of Energy to support a National Battery Recycling Program. The program would identify approved lithium battery recycling facilities, provide competitive grants to establish or improve collection systems (including consumer incentives to turn in used batteries), and require federal purchasers to prioritize batteries from approved facilities where feasible. The program would be funded from the new trust fund, created from the battery tax receipts, and would operate on a five-year timeline for rulemaking and program establishment. Together, the measures aim to accelerate battery recycling through incentives for detectors and data-driven handling, fund recycling infrastructure with a new tax, and promote nationwide battery recovery through a federally supported program.
Key Points
- 1Establishes a new 30% credit against tax (as part of the general business credit) for “qualified battery detector expenses” to purchase devices that detect batteries, used by recycling businesses; devices must use specified technologies and be first used by the taxpayer in their recycling trade.
- 2Defines “qualified battery detector expenses” and includes anti-double-dip rules (no duplicate credits or deductions for the same expense; reduce asset basis by the credit when applicable).
- 3Imposes a 5% tax on the sale of batteries by manufacturers, producers, or importers, with the tax receipts earmarked to fund the Lithium Battery Buy-Back Trust Fund.
- 4Creates the Lithium Battery Buy-Back Trust Fund to hold and allocate revenues from the battery tax; funds are available to the Secretary of Energy for the National Battery Recycling Program.
- 5Requires the National Battery Recycling Program to be established within five years of enactment, including identifying and approving recycling facilities, awarding competitive grants to develop collection and incentive systems, and encouraging federal agencies to purchase batteries from approved facilities.