H.R. 1946, the 45Q Repeal Act of 2025, would completely repeal the carbon oxide sequestration credit (Section 45Q) from the Internal Revenue Code and remove related references throughout the tax code. The bill would also make a series of conforming amendments to other code sections that currently interact with 45Q, effectively stripping away the credit while preserving certain transitional definitions and regulatory concepts. The repeal would take effect for taxable years beginning after December 31, 2025 (i.e., starting in 2026). In addition, the bill directs regulatory adjustments to ensure a secure geological storage framework (for the storage of captured carbon), using pre-repeal definitions for terms like “qualified carbon oxide” and outlining storage standards in coordination with the EPA, DOE, and the Department of the Interior.
Key Points
- 1Repeal of Section 45Q (carbon oxide sequestration credit) and removal of related entries from the tax code.
- 2Conforming amendments across the code to delete or modify references to 45Q in sections such as 38(b), 45V(d), 48(a)(15), 45Y, 45Z, 48C, 48E, 142(o), and 6417/6418, among others.
- 3Transitional definitions: the term “qualified carbon oxide” would retain the meaning given in 45Q as it existed immediately before the enactment of this bill, for purposes of other ongoing provisions until fully implemented.
- 4Regulatory framework for secure geological storage: the bill requires the Secretary (in consultation with EPA Administrator, DOE Secretary, and Interior Secretary) to establish regulations for adequate storage security, covering deep saline formations, oil and gas reservoirs, and unminable coal seams.
- 5Effective date: the amendments and repeal apply to taxable years beginning after December 31, 2025 (i.e., starting in 2026).