Sponsors (6)
The bill improves tax treatment for geothermal projects—boosting cash flow, lowering project costs, and encouraging deployment—but does so at the cost of reduced federal revenue, potential advantage to larger firms, targeted rather than technology‑neutral support, and some statutory uncertainty that could prompt disputes.
Geothermal developers, operators, and investors (including utilities and smaller project owners) can amortize exploration and development costs and deduct geothermal losses against nonpassive income, increasing after-tax cash flow and improving project economics.
Energy workers and local businesses may see expanded geothermal deployment and related jobs because the improved after-tax returns make more geothermal projects financially viable.
Taxpayers and project owners gain clearer timing for the tax changes (retroactive clarity in one provision and prospective application in the other), reducing short‑term tax uncertainty for geothermal investments.
Taxpayers broadly face reduced federal revenues because accelerated deductions and current loss deductions lower tax receipts, which could modestly increase the federal deficit or crowd out other spending.
Small geothermal developers and independent owners may be disadvantaged because larger, better‑capitalized firms can make greater use of amortization and loss rules, potentially skewing competition in the sector.
Unclear or placeholder statutory language in one provision could create uncertainty or lead to litigation and delay as taxpayers await regulations or guidance on the scope of the exception.
Based on analysis of 3 sections of legislative text.
Allows companies and investors to treat exploration and development costs for geothermal deposits the same way they treat costs for oil and gas by letting those costs be amortized for tax purposes. It also creates an exception to the passive loss rules for working interests in geothermal properties so owners who actively work geothermal projects are not blocked from using those losses against other income. The tax changes apply to taxable years beginning after the date of enactment and are limited to modifying two parts of the Internal Revenue Code: the amortization rules for geological and geophysical expenditures and the passive activity loss rules for geothermal working interests.
Introduced December 18, 2025 by Celeste Maloy · Last progress December 18, 2025