Tax Credit

U.S. Code

Years in Effect

FY22-31 score (JCT), in billions

Details/Description

Expensing of Intangible Drilling Costs

 26 U.S.C. §263(c)

1913 –

$10.486 

Enables oil and gas producers to fully expense (deduct) costs like wages, fuel, and drilling site preparations

Percentage Depletion Allowance for Oil and Gas

 26 U.S. Code §613

1926 –

$9.172

Allows independent oil and gas producers to deduct 15% of their revenue before taxes are calculated instead of the cost of resources depleted in a given year.

Percentage Depletion Allowance for Certain Coal Producers

 26 U.S. Code §613

1932 –

Allows certain coal producers to deduct 10% of their revenue before taxes are calculated instead of the cost of resources depleted in a given year.

Capital Gains Tax Treatment for Royalties on Coal and Lignite

1951 –

$0.455 

Gains from the sale of the rights to lignite and coal held by the original owner for more than one year are treated as long-term capital gains, rather than ordinary income, thus allowing them to be taxed at a lower rate.

Expensing for Mine Exploration and Development Costs

26 U.S.C. §617(a)

1951 / 1966 –

$0.91

Companies can expense the costs of ascertaining the location, quality, or quantity of a deposit, as well as the costs of development for extraction once the deposit is discovered. This immediate expensing is a subsidy because it deviates from the standard cost depletion method, which typically spreads the cost of tangible assets over their useful lives.

Accelerated Amortization of Air Pollution Control Equipment

 26 U.S. Code § 169

1969  –

$0.901 

Certain types of air pollution control facilities can be deducted over either five years or seven years.

Renewable electricity investment tax credit (ITC)

26 U.S.C. §48

1978 – 2024

$14

Tax credit for investments in solar, geothermal, fuel cell, microturbine, combined heat and power, wind, and waste energy recovery property; plus new provisions for energy storage technology, biogas, and microgrid controllers.

Expensing of Tertiary Injectants

26 U.S. Code §193

1980 –

Operators can deduct expenses related to tertiary injectants—such as CO2—in the year they are incurred. This immediate expensing is a subsidy because it deviates from the standard cost depletion method, which typically spreads the cost of tangible assets over their useful lives.

Deductions for Foreign Tax on Mineral income – Dual Capacity

26 U.S.C. §907

1983  –

$1.429 

Allows U.S.-based corporations to receive a credit against their U.S. tax liability for the taxes they pay to foreign countries on income earned abroad

Master Limited Partnerships (MLPs)

 26 U.S.C. §7704

1986 –

$1.027 

Publicly traded partnerships, or “master limited partnerships” (MLPs), can avoid corporate income tax if at least 90% of their income comes from qualifying sources, like oil and gas production and transportation

Exemption to Passive Loss Limitations for Oil and Gas

 26 U.S.C. §469

1986 –

$0.086 

Normally, taxpayers can deduct losses from passive activities (any activity in which a taxpayer has an economic interest but does not “materially participate”) up to but not over their total amount of passive income. Working interests in oil or gas wells are exempt from the passive loss limitation.

Cost Recovery for Qualified Facilities, Qualified Property, and Energy Storage Technology

26 U.S.C. §168(e)(3)(B)

1986  –

$0.62

Energy properties that are eligible for the 45Y and 48E tax credit may be treated as 5-year property.

Enhanced Oil Recovery Credit

26 USC 43

1991 –

$7.80

Tax credit of 15% of qualified EOR costs incurred domestically when oil prices drop below a certain level. This credit was available in 2016, 2017, 2018, and 2021.

Oil Spill Liability Trust Fund (OSLTF) and Superfund Excise Tax Exemption for Crude Oil derived from bitumen and kerogen-rich rock

26 U.S. Code §4611

1991  –

$0.395 

Crudes such as those that are produced from bituminous deposits as well as kerogen-rich rock are not treated as crude oil or petroleum products for purposes of the OSTLF tax, which is $0.09/barrel, and Superfund, which is $0.164/barrel.

Renewable electricity production tax credit (PTC) 

26 U.S.C. §45(d) and §48(a)(5)

1992 – 2024

$51.10

Tax credit for energy generated from closed- and open-loop biomass (latter includes livestock waste) facilities, landfill gas or trash facilities, qualified hydropower, marine and hydrokinetic, wind, and geothermal or solar energy.

Domestic Manufacturing Deduction for Hard Mineral Fossil Fuels

26 U.S. Code §4199

2004 –

Coal companies are able to deduct up to 9% of the cost of domestic manufacturing activities from income taxes

Manufacturing Tax Deduction for Oil and Gas Companies

IRC Sec 199

2004 –

Deduction for products are “manufactured, produced, or extracted in whole or in significant part in the United States.” 

Credit for Production from Marginal Wells

26 USC 45I

2005 –

$0.52

Tax credit of $3 ($2005) per barrel of oil and $0.50 ($2005) per 1,000 cubic feet (mcf) of natural gas for oil and gas produced from wells with daily production of 25 barrels of oil or less. The credit was available in 2016, 2017, 2019, 2020, and 2021.

Qualifying Advanced Coal Project Credit

26 U.S. Code §48A

2005 –

Tax credit of 20% for integrated gasification combined cycle (IGCC) projects and 15% for other advanced coal-based projects that produce electricity

Biodiesel tax credit

26 U.S.C. §40A

2005 – 2024

$5.60

Tax credit of $1/gallon for biomass-based diesel (biodiesel and renewable diesel) fuel, plus tax credit for alternative fuels

7-Year MACRS for Certain Natural Gas Gathering Lines

26 U.S.C. §168(e)(3)(C)(iv)

2005  –

Certain natural gas gathering lines can be treated as 7-year property.

15-year MACRS for Certain Natural Gas Distribution Lines

26 U.S.C. §168(e)(3)(E)(vi)

2005  –

$0.3 

Natural gas distribution pipelines can be treated as 15-year property.

15-year MACRS for Certain Electric Transmission Property

26 U.S.C. §168(e)(3)(E)(v)

2005  –

$0.3 

Certain Electric Transmission Property can be treated as 15-year property.

Amortization of Geological and Geophysical expenditures

26 U.S. Code §167(h)

2005 –

$1.985 

Expenses for the exploration or development of oil or gas are allowed as a deduction ratably over the 24-month period (as opposed to 7-year), except for major integrated oil companies

Nonbusiness Energy Property Credit

26 U.S.C. §25C

2006 –

$12.45

Tax credit of 30% for individuals implementing “qualified energy efficiency improvements” and for certain “residential energy property expenditures”

Residential Energy Efficient Property Credit

26 U.S.C. §25D

2006 –

$22

Tax credit of up to 30% for expenditures for certain solar electric, solar water heater, fuel cell, small wind, geothermal heat pump, and battery storage technologies.

Energy Efficient Commercial Buildings Deduction

26 U.S.C. §179D

2006 –

$0.36

Tax deduction for the cost of energy efficient commercial building property, calculated by the size of the building.

New Energy Efficient Home Credit

26 U.S.C. §45L

2006 –

$2.04

Tax credit for certain energy efficient homes, such as those meeting Energy Star requirements.

Alternative Fuel Refueling Property Credit

26 U.S.C. §30C

2006 –

$1.70

Tax credit up to 30% for certain fueling equipment for 85% ethanol, natural gas, compressed or liquified natural gas, liquefied petroleum gas or hydrogen; 20% (or more) biodiesel; or electricity.

Tax Credit for Carbon Oxide Sequestration

26 U.S.C. §45Q

2008 –

$3.20

Tax credit for carbon oxide captured and sequestered.

10-year MACRS for Smart Electric Distribution Property

26 U.S.C. §168(e)(3)(D)

2008  –

$0.3 

Smart Electric Distribution Property can be treated as 10-year property.

Advanced Energy Project Credit

26 U.S.C. §48C

2009 –

$6.30

Credit for eligible energy projects, including but not limited to industrial technology designed to reduce GHG emissions and “processing, refining, or recycling of critical materials.”

Clean Vehicle Credit

26 U.S.C. §30D

2009 –

$7.54

Tax credit for certain electric vehicles.

Second Generation Biofuel Producer Tax Credit (Cellulosic tax credit)

26 U.S.C. §40

2009 – 2021

$0.54

Tax credit of $1.01/gallon for production of cellulosic based biofuel.

Rules for Foreign Oil and Gas Extraction Income (FOGEI) and Foreign Oil Related Income (FORI)

 26 U.S.C. §951A

2017  –

$84.781 

Exclusion of foreign oil-related income from taxable income for purposes of calculating GILTI and foreign tax credits.

Credit for Production of Clean Hydrogen

26 U.S.C. §45V

2022 –

$13.20

Tax credit of up to $0.60/kg for production of hydrogen; credit varies by lifecycle GHG emissions rate, with lower emission hydrogen receiving higher credits

Credit for Previously-Owned Clean Vehicles

26 U.S.C. §25E

2023 –

$1.35

Tax credit of 30% of the sale price of a previously owned electric vehicle but no more than $4,000.

Credit for Qualified Commercial Clean Vehicles

26 U.S.C. §45W

2023 –

$3.58

Tax credit for certain electric and hydrogen powered fuel cell commercial vehicles.

Advanced Manufacturing Production Credit

26 U.S.C. §45X

2023 –

$30.60

Tax credit for manufacturing components related to wind and solar, batteries, and minerals.

Sustainable Aviation Fuel Credit

26 U.S.C. §40B

2023 – 2024

$0.49

Tax credit of $1.25/gallon or more for aviation fuel meeting certain GHG emissions rates and other requirements

Zero-emission Nuclear Power Production Credit

26 U.S.C. §45U

2024 –

$30

Tax credit for electricity produced at qualified nuclear power facilities.

Clean Electricity Investment Credit

26 U.S.C. §48E

2025 –

$50.90

Phased tax credit for electricity investments “for which the anticipated GHG emissions rate is not greater than zero.”

Clean Electricity Production Credit

26 U.S.C. §45Y

2025 –

$11.20

Phased tax credit for zero-emission electricity production.

Clean Fuel Production Credit

26 USC 45Z

2025-2027

$3

Tax credit of $0.20-$1.00/gallon for production of fuels with carbon intensity reductions; sustainable aviation fuel could receive credit of up to $1.75/gallon, with a minimum of $0.35/gallon.