In a surprising turn of events, late on July 27, 2022, Senators Manchin (D-WV) and Schumer (D-NY) released the Inflation Reduction Act of 2022. The Act, which runs 725 pages, includes numerous energy tax provisions aimed at enhancing US energy security. Tax pay-fors in the bill include a corporate minimum tax and an increase in the tax rate on carried interest. A summary of the bill was also released.
Energy tax highlights of the Act include:
- Extensions and expansions of the Section 45 production tax credit and the Section 48 investment tax credit.
- Extension and expansion of the Section 45Q carbon capture and sequestration credit.
- Additional tax credits for zero-emission power production, clean energy production and clean hydrogen production.
- Extension of biodiesel and alternative fuels credits and inclusion of a sustainable aviation fuel credit.
- Direct pay for tax-exempt entities, state or local governments (or political subdivisions thereof), the Tennessee Valley Authority, an Indian tribal government, or any Alaska Native Corporation.
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