Congress Extends Section 45Q Beginning of Construction Date by Two Years in COVID-Relief Bill
Client Alert | 2 min read | 12.29.20
As part of the H.R. 133, The Consolidated Appropriations Act, 2021, passed by Congress on December 21, 2020, and signed by the President on December 27, 2020, Congress included an extension to the beginning of construction date for carbon capture projects under Section 45Q. Section 45Q provides tax credits for the capture and sequestration of carbon dioxide and other carbon oxides from industrial sources that, absent capture and utilization or sequestration, would be vented to the atmosphere. Section 45Q, as amended by the Bipartisan Budget Act of 2018, required that a qualified facility’s construction must begin by the end of 2023 to be eligible for the Section 45Q tax credit. The new law, extends the deadline to start construction for two years, so that projects will have until the end of 2025 to demonstrate that construction has begun, as required to qualify for the tax credit.
Under the previous January 1, 2024 deadline, investors may have struggled to meet the requirements for beginning of construction in time. Carbon capture projects require significant planning and investments in capture equipment and infrastructure. Absent Section 45Q credits, it is often not economic for taxpayers to capture and sequester CO2 or other carbon oxides. Moreover, sequestration of CO2, other than through EOR or other industrial uses, may have no associated revenue stream. Permitting emitters and EOR operators to partner with investors that are willing to invest as a result of the Section 45Q credit may encourage owners of capital to fund significant carbon capture projects that would otherwise be non-economic. The extension of the beginning of construction deadline in the COVID-relief bill will be welcomed by the industry and investors.
Earlier this year, the IRS issued Notice 2020-12, which included guidance and safe harbors on the beginning of construction under Section 45Q. More coverage on that guidance and other Section 45Q developments is available here:
Contacts
Insights
Client Alert | 8 min read | 04.17.26
CMS Finalizes CY 2027 Medicare Advantage and Part D Rule: Key Implications for Plan Sponsors
On April 6, 2026, the Centers for Medicare & Medicaid Services (CMS) published its final rule governing the Medicare Advantage (Part C) and Prescription Drug Benefit (Part D) programs for Contract Year (CY) 2027. The final rule is effective June 1, 2026, with most provisions applicable to coverage beginning January 1, 2027, and marketing and communications changes taking effect October 1, 2026. Beyond payment, the rule pursues a broad deregulatory agenda aligned with Executive Order 14192, reversing marketing and enrollment safeguards introduced in 2023 and easing documentation and reporting obligations, while introducing new program integrity requirements.
Client Alert | 1 min read | 04.17.26
Client Alert | 3 min read | 04.17.26
Client Alert | 2 min read | 04.16.26
