IRS Offers a Safe Harbor for Carbon Capture Tax Credit Claims

Treasury Department and IRS on Friday released guidance that makes it easier for taxpayers claiming the carbon capture tax credit.

Notice 2026-1 provides a safe harbor for determining eligibility and the value of the 45Q carbon oxide sequestration credit when the carbon is captured by injecting it into the ground.

The notice comes after the Environmental Protection Agency proposed regulations to remove reporting requirements for the geological sequestration of carbon oxide.

Under the safe harbor, taxpayers can use a qualified engineer or geologist to create a greenhouse gas report if the EPA doesn’t launch its greenhouse gas reporting tool for ...