Sponsors (11)
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Expands which energy-related activities count as qualifying income for publicly traded partnerships by adding a wide range of low‑carbon and clean energy activities (generation, storage, transport, conversion, and certain fuels and chemicals). The Treasury Secretary is directed, after consultation, to make determinations about greenhouse gas (GHG) reductions for some fuels. The change applies to taxable years beginning after December 31, 2025.
Amend Internal Revenue Code section 7704(d)(1)(E) by striking existing text and inserting a new list of items describing income and gains that qualify for publicly traded partnership treatment.
Income and gains derived from the generation of electric power or thermal energy exclusively using any qualified energy resource (as defined in section 45(c)(1)) qualify as described income.
Income from the operation of energy property (as defined in section 48(a)(3)), determined without regard to any date by which construction of the facility is required to begin, qualifies as described income.
For facilities described in paragraph (3) or (7) of section 45(d) (determined without regard to placed-in-service or construction-start dates), income from accepting or processing open‑loop biomass or municipal solid waste qualifies as described income.
Income from the storage of electric power or thermal energy exclusively using energy storage technology (as defined in section 48(c)(6)) qualifies as described income.
Primary actors affected are publicly traded partnerships (PTPs) and energy companies that could earn qualifying income under the expanded definition. Those entities may restructure activities or form PTPs to benefit from partnership tax treatment (avoiding corporate-level taxation). Investors in PTPs could gain access to a wider range of energy-related investments labeled as partnership income, potentially increasing capital flows into clean-energy infrastructure, fuels, storage, and conversion projects. The Treasury and IRS will have increased administrative work: rulemaking, guidance, and determinations about whether specific fuels meet greenhouse gas reduction criteria, likely in consultation with energy and environmental agencies. State and local governments are unlikely to face direct mandates from this change, though local permitting and utility rules will still shape project feasibility. The provision could modestly affect federal revenue timing/character depending on taxpayer behavior (structuring choices and taxable income character), but it does not change tax rates or create direct spending. Market effects include potential incentives for developing qualifying low‑carbon fuels, chemicals, storage, and transport infrastructure as part of PTP-eligible business models.
Read twice and referred to the Committee on Finance.
Introduced February 11, 2025 by Jerry Moran · Last progress February 11, 2025
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Read twice and referred to the Committee on Finance.
Introduced in Senate
