S-425 : Still Just a Bill

The "Enhancing Energy Recovery Act" (S. 425) proposes amendments to Section 45Q of the Internal Revenue Code of 1986, which concerns the carbon oxide sequestration credit. The main purpose of the bill is to modify the credit to ensure parity for different uses and utilizations of qualified carbon oxide. Here's a breakdown:

• Parity for Carbon Oxide Use: The bill aims to equalize the tax credits available for carbon oxide, regardless of whether it is disposed of through secure geological storage, used in enhanced oil or natural gas recovery projects, or utilized in other ways.
• Amendment to Section 45Q: The bill modifies subsection (a) to include utilizing carbon oxide as described in subsection (f)(5) and strikes paragraph (4).
• Credit Amounts:
  • For taxable years after 2024 and before 2027, the applicable dollar amount shall be $17.
  • For taxable years after 2026, the amount will be $17 adjusted for inflation, determined under section 43(b)(3)(B), substituting '2025' for '1990'.
  • If paragraph (3)(A) applies, the applicable dollar amount shall be applied by substituting '$36' for `$17' each place it appears.
• Conforming Amendments: Section 6417(d)(3)(C)(i)(II)(bb) of the Internal Revenue Code of 1986 is amended by striking ``paragraph (3)(A) or (4)(A) of section 45Q(a)'' and inserting ``section 45Q(a)(3)(A)''.
• Effective Date: The changes will apply to taxable years beginning after December 31, 2024.