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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6824 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 6824
To amend the Internal Revenue Code of 1986 to establish a tax credit
for qualified combined heat and power system property, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 17, 2025
Ms. Van Duyne (for herself and Mr. Kustoff) introduced the following
bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish a tax credit
for qualified combined heat and power system property, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. TAX CREDIT FOR QUALIFIED COMBINED HEAT AND POWER SYSTEM
PROPERTY.
(a) Establishment of Credit.--
(1) In general.--Subpart E of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 48E the following new section:
``SEC. 48F. CREDIT FOR QUALIFIED COMBINED HEAT AND POWER SYSTEM
PROPERTY.
``(a) Credit for Qualified Combined Heat and Power System
Property.--
``(1) In general.--For purposes of section 46, except as
provided in subsection (c)(1)(B), the credit for qualified
combined heat and power system property for any taxable year is
an amount equal to 10 percent of the basis of each qualified
combined heat and power system property placed in service
during such taxable year.
``(2) Coordination with rehabilitation credit.--The
percentage specified in paragraph (1) shall not apply to that
portion of the basis of any property which is attributable to
qualified rehabilitation expenditures (as defined in section
47(c)(2)).
``(3) Qualified combined heat and power system property.--
For purposes of this section, the term `qualified combined heat
and power system property' means any property--
``(A) which is combined heat and power system
property,
``(B)(i) the construction, reconstruction, or
erection of which is completed by the taxpayer, or
``(ii) which is acquired by the taxpayer if the
original use of such property commences with the
taxpayer,
``(C) with respect to which depreciation (or
amortization in lieu of depreciation) is allowable, and
``(D) which meets the performance and quality
standards (if any) which--
``(i) have been prescribed by the Secretary
by regulations (after consultation with the
Secretary of Energy), and
``(ii) are in effect at the time of the
acquisition of the property.
Such term shall not include any property which is part
of a facility the production from which is allowed as a
credit under section 45 for the taxable year or any
prior taxable year.
``(4) Special rule for property financed by tax-exempt
bonds.--Rules similar to the rule under section 45(b)(3) shall
apply for purposes of this section.
``(5) Domestic content bonus credit amount.--
``(A) In general.--In the case of any energy
project which satisfies the requirement under
subparagraph (B), for purposes of applying paragraph
(1) with respect to qualified combined heat and power
system property that is part of such project, the
percentage specified in paragraph (1) shall be
increased by 10 percentage points.
``(B) Requirement.--Rules similar to the rules of
section 45(b)(9)(B) shall apply.
``(6) Increase in credit rate for energy communities.--In
the case of any energy project that is placed in service within
an energy community (as defined in section 45(b)(11)(B), as
applied by substituting `energy project' for `qualified
facility' each place it appears), for purposes of applying
paragraph (1) with respect to qualified combined heat and power
system property which is part of such project, the percentage
specified in paragraph (1) shall be increased by 10 percentage
points.
``(7) Regulations and guidance.--The Secretary shall issue
such regulations or other guidance as the Secretary determines
necessary to carry out the purposes of this subsection,
including regulations or other guidance which provides for
requirements for recordkeeping or information reporting for
purposes of administering the requirements of this subsection.
``(b) Certain Progress Expenditure Rules Made Applicable.--Rules
similar to the rules of subsections (c)(4) and (d) of section 46 (as in
effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) shall apply for purposes of subsection (a).
``(c) Definitions.--For purposes of this section--
``(1) Combined heat and power system property.--
``(A) Combined heat and power system property.--The
term `combined heat and power system property' means
property comprising a system--
``(i) which uses the same energy source for
the simultaneous or sequential generation of
electrical power, mechanical shaft power, or
both, in combination with the generation of
steam or other forms of useful thermal energy
(including heating and cooling applications),
``(ii) which produces--
``(I) at least 20 percent of its
total useful energy in the form of
thermal energy which is not used to
produce electrical or mechanical power
(or combination thereof), and
``(II) at least 20 percent of its
total useful energy in the form of
electrical or mechanical power (or
combination thereof),
``(iii) the energy efficiency percentage of
which exceeds 60 percent, and
``(iv) the construction of which begins on
or after January 1, 2025.
``(B) Limitation.--
``(i) In general.--In the case of combined
heat and power system property with an
electrical capacity in excess of the applicable
capacity placed in service during the taxable
year, the credit under subsection (a)(1)
(determined without regard to this paragraph)
for such year shall be equal to the amount
which bears the same ratio to such credit as
the applicable capacity bears to the capacity
of such property.
``(ii) Applicable capacity.--For purposes
of clause (i), the term `applicable capacity'
means 25 megawatts or a mechanical energy
capacity of more than 33,500 horsepower, or an
equivalent combination of electrical and
mechanical energy capacities.
``(iii) Maximum capacity.--The term
`combined heat and power system property' shall
not include any property comprising a system if
such system has a capacity in excess of 50
megawatts or a mechanical energy capacity in
excess of 67,000 horsepower, or an equivalent
combination of electrical and mechanical energy
capacities.
``(iv) Clarification regarding capacity
determinations.--For purposes of this
subparagraph, the determination of the
electrical or mechanical energy capacity of any
system shall be based on the normal operating
rates of such system.
``(C) Special rules.--
``(i) Energy efficiency percentage.--For
purposes of this paragraph, the energy
efficiency percentage of a system is the
fraction--
``(I) the numerator of which is the
total useful electrical, thermal, and
mechanical power produced by the system
at normal operating rates, and expected
to be consumed in its normal
application, and
``(II) the denominator of which is
the lower heating value of the fuel
sources for the system.
``(ii) Determinations made on btu basis.--
The energy efficiency percentage and the
percentages under subparagraph (A)(ii) shall be
determined on a Btu basis.
``(iii) Input and output property not
included.--The term `combined heat and power
system property' does not include property used
to transport the energy source to the facility
or to distribute energy produced by the
facility.
``(D) Systems using biomass.--If a system is
designed to use biomass (within the meaning of
paragraphs (2) and (3) of section 45(c) without regard
to the last sentence of paragraph (3)(A)) for at least
90 percent of the energy source--
``(i) subparagraph (A)(iii) shall not
apply, but
``(ii) the amount of credit determined
under subsection (a) with respect to such
system shall not exceed the amount which bears
the same ratio to such amount of credit
(determined without regard to this
subparagraph) as the energy efficiency
percentage of such system bears to 60 percent.
``(2) Energy project.--The term `energy project' means a
project consisting of one or more qualified combined heat and
power system properties that are part of a single project.''.
(2) Clerical amendment.--The table of sections for subpart
E of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 48E the
following new item:
``48F. Credit for qualified combined heat and power system property.''.
(b) Coordination With Energy Credit.--Section 48(c)(3)(B) of such
Code is amended by adding at the end the following new clause:
``(iv) Clarification regarding capacity
determinations.--For purposes of this
subparagraph, the determination of the
electrical or mechanical energy capacity of any
system shall be based on the normal operating
rates of such system.''.
(c) Conforming Amendments.--
(1) Section 38(c)(4)(B)(x) of such Code is amended by
inserting ``or the credit for qualified combined heat and power
system property determined under section 48F'' after ``section
48''.
(2) Section 45L(f) of such Code is amended by striking ``47
or 48(a)'' and inserting ``47, 48(a), or 48F(a)''.
(3) Section 46 of such Code is amended by striking ``and''
at the end of paragraph (6), by striking the period at the end
of paragraph (7) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(8) the credit for qualified combined heat and power
system property.''.
(4) Section 48C(f) of such Code is amended by inserting
``48F,'' after ``48E,''.
(5) Section 50(a)(2)(E) of such Code is amended by striking
``or 48E(e)'' and inserting ``48E(e), or 48F(b)''.
(6) Section 59A(b)(3)(C) of such Code is amended by
inserting ``or the credit for qualified combined heat and power
system property determined under section 48F'' after ``section
48''.
(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
property the construction of which begins after December 31,
2024.
(2) Coordination with energy credit.--
(A) In general.--The amendment made by subsection
(b) shall apply to property--
(i) the construction of which begins before
January 1, 2025, and
(ii) which is placed in service during
taxable years beginning after December 31,
2024.
(B) No inference.--The amendment made by subsection
(b) shall not be construed to create any inference with
respect to the proper application of section
48(c)(3)(B) of the Internal Revenue Code of 1986 with
respect to taxable years beginning before January 1,
2025.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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