Sponsors (13)
The bill removes tax incentives for using captured CO2 in enhanced oil recovery and deletes an EOR credit, trading reduced fossil‑fuel subsidies and simpler tax rules for higher costs to affected companies, potential higher energy prices for consumers, and slower deployment of some carbon‑capture projects.
Taxpayers and the public: reduces direct taxpayer subsidies for certain fossil-fuel related activities by eliminating the enhanced oil recovery (EOR) credit and restricting Section 45Q tertiary-injectant treatment, aligning tax policy more with climate goals.
Taxpayers filing returns: simplifies tax compliance for some filers by removing a specialized credit (section 43), reducing complexity in tax returns and filings after enactment.
Consumers and middle‑class families: may face higher fuel and energy prices if producers pass through increased costs resulting from the loss of EOR/tertiary-injectant tax benefits.
Utilities, energy companies, and owners/operators of carbon‑capture or EOR facilities: will lose tax benefits (loss of the EOR credit and Section 45Q tertiary-injectant treatment), raising their tax liabilities and project operating or capital costs.
Workers, local communities, and climate efforts: reduced financial incentives for certain carbon capture and EOR projects could slow deployment of CCS technologies, risking job losses in affected facilities and delaying emissions reductions.
Based on analysis of 3 sections of legislative text.
Repeals the enhanced oil recovery tax credit and bars new facilities from using injected CO2 as a qualifying tertiary injectant for the referenced carbon credit, effective after enactment.
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
Eliminates a longstanding federal tax subsidy for enhanced oil recovery (EOR) by repealing the Internal Revenue Code’s section that grants the EOR credit and by preventing new facilities from counting carbon oxide used as a “tertiary injectant” for a separate carbon tax credit. Changes apply to taxable years beginning after the date of enactment. The bill also makes conforming amendments throughout the tax code to remove references to the repealed EOR credit and updates cross-references and section names to reflect the repeal and the new rule for qualifying carbon capture projects.