Sponsors (6)
The bill clarifies and extends tax amortization and passive-loss language to encourage geothermal investment and reduce legal uncertainty, but it reduces near-term federal revenue, may favor larger energy firms over smaller developers, and creates short-term compliance and implementation costs.
Geothermal developers and energy companies can amortize geological and geophysical exploration costs, lowering taxable income for geothermal projects and improving the financial viability of clean geothermal investment.
Taxpayers and tax professionals gain clearer statutory language (including for passive-loss rules), which reduces uncertainty, likely lowers IRS disputes and litigation, and simplifies enforcement and guidance by the IRS.
Taxpayers benefit from prospective-only application of the change to passive-loss language, avoiding retroactive liability or the need to amend prior years' returns.
All taxpayers face a reduction in near-term federal tax receipts because expanded amortization delays revenue, which could marginally increase the deficit or crowd out other federal spending.
Smaller renewable developers and small businesses may be disadvantaged because the tax benefit primarily helps capital-intensive energy firms that can immediately use amortization, creating uneven competitive effects.
The IRS, tax preparers, and taxpayers will incur compliance and administrative transition costs as regulations, guidance, and tax software are updated and staff time is used to implement and enforce the changes.
Based on analysis of 3 sections of legislative text.
Allows geological and geophysical costs for geothermal deposits to be amortized like oil and gas costs, and updates passive-loss wording to include geothermal activity.
Expands current tax rules so costs for exploring and developing geothermal deposits can be amortized (spread out) over time in the same way costs for oil and gas exploration are now. It also updates language in the passive loss rules to reflect the inclusion of geothermal activity. Both changes apply to taxable years beginning after the law is enacted.
Introduced December 18, 2025 by Celeste Maloy · Last progress December 18, 2025