Sponsors (19)
The bill makes hydropower environmental, safety, and access upgrades much more affordable—especially for public and well-capitalized owners—improving local ecosystems and recreation, but it reduces federal revenue, may leave many small projects and ratepayers behind, and adds some administrative hurdles.
Owners of qualifying hydropower facilities (including public utilities and municipalities) can claim a 30% investment tax credit — and may elect direct payment or transfer of the credit — which substantially lowers the up-front cost of upgrades and makes projects easier to finance.
Rivers and nearby communities will receive funded environmental and safety improvements (fish passage, water quality, sediment transport, dam safety), which can improve ecosystem health and public safety near dams.
Rural communities and local economies stand to gain from removal of obsolete river obstructions and improved public access, boosting recreation, tourism, and associated economic activity.
All taxpayers face reduced federal tax revenue because the credit lowers government receipts, which could increase the deficit or force trade-offs with other federal spending absent offsets.
Many small or legacy hydropower projects and their local communities may be excluded by narrow eligibility rules (e.g., licensing dates, size and interconnection limits), leaving those owners and communities without support.
Ratepayers and lower‑income communities risk seeing limited benefit because monetization (transfer/direct payment) of the credit may primarily benefit well‑capitalized developers or outside investors rather than reducing consumer rates.
Based on analysis of 2 sections of legislative text.
Creates a 30% investment tax credit for qualifying hydropower improvement property and certain approved small remote dams placed in service after Dec 31, 2022, with transfer/direct-pay options.
Introduced March 14, 2025 by Adrian Smith · Last progress March 14, 2025
Creates a federal tax credit equal to 30% of the cost of qualifying hydropower improvement property and certain small remote hydropower projects placed in service after Dec. 31, 2022. The credit covers river-restoration measures (fish passage, water-quality and habitat work, removal of obsolete obstructions), dam safety upgrades, public access improvements tied to licenses or settlements, and approved small remote dams; projects must have written approval from FERC or the appropriate state/local official by Jan. 1, 2032. The bill also allows elective direct payment or transfer of the credit and updates other Internal Revenue Code cross-references to include the new credit.