Sponsors (12)
The bill simplifies tax administration and reduces a fossil-fuel related subsidy (aligning policy with climate goals), but it also removes tax benefits for EOR and certain carbon‑capture uses—raising costs for affected companies and risking higher energy prices and slower CCS deployment.
Taxpayers and typical filers: tax filing is simplified by eliminating the specialized enhanced oil recovery credit, reducing return complexity for affected returns.
Taxpayers and climate-focused stakeholders: removing the enhanced oil recovery credit reduces a taxpayer subsidy for certain fossil-fuel activities, aligning tax policy more closely with climate goals.
Broad consumers (households and businesses): eliminating credits could be passed through as higher fuel and energy prices, increasing costs for many Americans.
Operators, workers, and clean‑energy goals: reduced financial incentives for carbon capture and enhanced oil recovery (EOR) projects may slow deployment of CCS technologies and associated job creation.
Owners/operators and project developers: removal of tax benefits (loss of Section 45Q treatment for using captured CO2 as a tertiary injectant and elimination of the EOR credit) raises project and company tax liabilities and capital costs.
Based on analysis of 3 sections of legislative text.
Repeals the standalone enhanced oil recovery tax credit and prevents new facilities from treating injected captured carbon as qualifying under Section 45Q, effective for taxable years after enactment.
The bill removes a set of tax incentives for enhanced oil recovery (EOR). It eliminates the separate EOR credit in the tax code, and closes a rule that treated captured carbon used as a "tertiary injectant" for EOR as eligible under the Section 45Q carbon capture tax credit for facilities begun after enactment, with both changes effective for taxable years beginning after enactment. The effect is to stop two forms of federal tax support for using captured carbon in EOR for newly constructed facilities: (1) repeal of the standalone EOR credit; and (2) denial of treating injected carbon for EOR as qualifying for the Section 45Q credit for new facilities built after the law takes effect.
Official title: To amend the Internal Revenue Code of 1986 to provide for an end date for the credit for certain qualified carbon oxide, and for other purposes.
Introduced March 26, 2026 by Ro Khanna · Last progress March 26, 2026