Credit for Carbon Sequestration 45Q

What qualifies

A performance-based tax credit for projects that capture storage of carbon dioxide (CO2) from the atmosphere or industrial and power facilities. The credit can be realized for 12 years after the carbon capture equipment is operational or 5 years if transferred. Projects must meet carbon capture thresholds.

Eligible projects include:

• Secure storage of captured carbon dioxide (CO2) in appropriate geologic formations, including saline or other geologic formations or oil and gas fields
• Reuse of captured CO2 or carbon monoxide (CO) as a feedstock to produce low embodied carbon products such as fuels, chemicals, and building materials

Incentive value

Credit amounts are determined by technology type and the amount of CO2 sequestered. For details on credit amounts please click here.

Tax exempt entities can utilize direct pay. All other entities are allowed a one-time transfer to sell their credits another entity.

Who is eligible

Owners of eligible carbon capture equipment, including tax exempt entities.

When the credit is available

For qualifying projects that start construction between January 1, 2023, and January 1, 2033.

How to claim the credit

Use Form 8933 to claim the 45Q carbon oxide sequestration credit. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.