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Credit for Carbon Oxide Sequestration – 26 U.S. Code § 45Q

IRA Statuatory Location:


Tax Code Location:

26 U.S. Code § 45Q

New or Modified Provision:

Extended and modified, tying the credit amounts to meetingprevailing wage and registered apprenticeship requirements, providing an enhanced credit fordirect air capture (DAC), and lowering the carbon capture threshold requirements at facilities.

Eligible Recipients:

CO2 emitting facilities

Tribal Eligibility:



Funded by:

U.S. Department of Treasury


Provides a credit for carbon dioxide sequestration coupled with permitted end uses within the United States. U.S. facilities within minimum volumes: 1,000 metric tons of CO2 per yearfor DAC facilities; 18,750 metric tons for electricity generating facilities (with carbon capturecapacity of 75% of baseline CO2 production); 12,500 metric tons for other facilities.
Direct Pay Eligibility:
Yes, for tax-exempt organizations, states, political subdivisions, the Tennessee Valley Authority, Indian Tribal governments, Alaska Native Corporations, and rural electricity co-ops (applicable entities). Entities other than applicable entities are eligible for up to 5 years of direct pay (which expires at the end of 2032) if they make an election.
Credit reduced for tax-exempt bonds with similar rules as section 45(b)(3).
Energy Community Bonus:

Relevant Announcements

Related Resources

Additional information is available on the Resources page.

Key Details

Period of Availability
Credit can be claimed for 12 years after a facility is placed in service.Facilities must be placed in service before 1/1/33.
Tax Mechanism:
Production tax credit
Base Credit Amount:
$17/metric ton of carbon dioxide captured and sequestered; $12/metricton for carbon dioxide that is injected for enhanced oil recovery or utilized. Those amounts are$36 and $26, respectively, for direct air capture facilities
Bonus Credit Amount:
5 times the base amounts if the facility meets prevailing wage and apprenticeship requirements
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