You may have heard about H.R. 1946, a bill calling for the repeal of Section 45Q, the carbon sequestration tax credit. It was introduced in the House on March 6, 2025, by Rep. Scott Perry (R-PA). As of now, the bill remains in the introductory stage and has not advanced through committee review or floor votes.

To become law, the bill would still require approval from the House, the Senate, and the President’s signature. Given its early stage, the bill faces several procedural hurdles. However, it is likely that we will see some form of reform to Section 45Q, even if a full repeal does not materialize. That said, the specific nature and scope of these changes remain uncertain.

In related developments, 38 House Republicans recently signed a letter advocating for the full repeal of all energy tax credits, including Sections 45Q, 45V, 45Y, 48, and 48E. While the letter carries no legislative authority, it signals strong political support for reforms and suggests that significant changes to the Inflation Reduction Act (IRA) may be on the horizon. Businesses interested in monetizing these credits should prepare for potential modifications and ensure compliance with existing program requirements. In addition to the signed letter advocating for the full repeal of all energy tax credits, including Sections 45Q, 45V, 45Y, 48, and 48E, the proposed H.R. 310 represents a broader effort to dismantle IRA funding that supports renewable energy initiatives. The bill is currently in the House of Representatives, but has seen no movement since its introduction on January 9, 2025. We expect significant reform to the bill before it becomes law—if it is enacted at all.

Lastly, there’s been increased discussion around proposed budget cuts to energy tax credits as part of broader federal spending negotiations. While no formal proposals have yet been introduced to reduce funding for credits like 45V, 45Y, 48, or 48E, the likelihood of cuts in future budget cycles remains high. Any such changes would require passage of new legislation by both chambers of Congress and the President’s approval. Whether these changes would apply retroactively or prospectively would depend on the statutory language. Historically, major changes to tax credits have included grandfathering provisions to protect existing projects, but there is no guarantee this practice will continue.