Sponsors (6)
The bill clarifies and extends tax amortization rules to geothermal exploration—reducing tax uncertainty and encouraging geothermal investment—while lowering near-term federal revenue and imposing transitional and distributional costs that favor larger, capitalized firms.
Taxpayers and the IRS: clearer statutory wording reduces disputes and litigation over passive-loss and exploration-cost rules, simplifying enforcement and lowering future administrative burdens.
Companies exploring or developing geothermal deposits: allowed amortization of geological and geophysical exploration costs lowers taxable income for those projects, improving project economics.
Taxpayers and the broader public: treating geothermal like oil and gas for exploration amortization makes geothermal projects more financially viable, encouraging additional clean energy investment and potential environmental benefits.
All taxpayers: expanding amortization for geothermal exploration reduces near-term federal tax receipts, which could modestly increase the deficit or crowd out other spending priorities.
Small renewable developers and smaller firms: the provision primarily benefits capital-intensive energy companies that can utilize amortization immediately, potentially creating uneven competitive advantages.
Taxpayers, tax preparers, and the IRS: implementing the changes will require updated IRS guidance, regulatory revisions, and software/filing updates, creating compliance costs and transitional workload for both Treasury/IRS and filers.
Based on analysis of 3 sections of legislative text.
Allows amortization of geological and geophysical expenditures for geothermal deposits like oil and gas and adjusts related passive loss wording.
Official title: To amend the Internal Revenue Code of 1986 to allow amortization of geological and geophysical expenditures in connection with the exploration for, or development of, geothermal deposits, and for other purposes.
Introduced December 18, 2025 by Celeste Maloy · Last progress December 18, 2025
Expands existing federal tax treatment for exploration and development costs so geothermal deposits are treated the same as oil and gas for amortization of geological and geophysical expenditures, and adjusts a related passive loss rule heading and wording. The changes take effect for taxable years beginning after the date of enactment, lowering upfront tax cost treatment barriers for geothermal project developers and investors.