Treasury, IRS provide safe harbor for taxpayers claiming the carbon capture credit

IR-2025-122, Dec. 19, 2025

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today provided guidance for taxpayers claiming the tax credit for carbon capture and sequestration, which was expanded and modified in the One, Big, Beautiful Bill. Notice 2026-01 PDF provides a safe harbor for taxpayers that wish to claim the credit for qualified carbon oxide captured and disposed of in secure geological storage occurring during calendar year 2025.

Specifically, Notice 2026-01 provides a safe harbor for determining eligibility for and the amount of the credit for the capture of qualified carbon oxide which is disposed of in secure geological storage in the manner described in the relevant sections of the regulations under section 45Q of the Internal Revenue Code during calendar year 2025.

Under the safe harbor, if the Environmental Protection Agency does not launch its electronic Greenhouse Gas Reporting Tool for reporting year 2025 by June 10, 2026, taxpayers may prepare and submit an annual report to a qualified independent engineer or geologist. The engineer or geologist must then certify that the capture and disposal described in the annual report is in compliance with relevant greenhouse gas reporting program requirements as in effect on December 31, 2025, in the manner specified in today’s guidance.

This notice also informs taxpayers that Treasury and IRS intend to issue regulations under section 45Q, including with respect to measurement and verification standards, and that taxpayers may rely on this guidance until the regulations are issued.

Today’s guidance primarily affects businesses planning to claim credits for qualified carbon oxide captured in secure geological storage occurring during calendar year 2025.

For more information about tax provisions under the OBBB, see One, Big, Beautiful Bill Provisions on IRS.gov.