The Treasury Department and the IRS on Dec. 19 offered guidance to taxpayers who claim the tax credit for carbon capture and sequestration. The credit was expanded and changed under the One, Big, Beautiful Bill.

According to an IRS release, Notice 2026-01 PDF offers a safe harbor for those taxpayers who want to claim the credit for qualified carbon oxide captured and disposed of in secure geological storage that happened in the 2025 calendar year.

The notice specifically offers a safe harbor for finding out the eligibility for and the amount of the credit for the capture of qualified carbon oxide that is disposed of in secure geological storage in the way depicted under relevant sections of the regulations under section 45Q of the Internal Revenue Code in 2025.

With the safe harbor, if the Environmental Protection Agency is unable to launch its electronic Greenhouse Gas Reporting Tool for reporting year 2025 by Jun. 10, 2026, taxpayers are allowed to prepare and submit an annual report to a qualified independent engineer or geologist.

After this, the engineer or geologist must certify that the capture and disposal in the annual report is in compliance with relevant greenhouse gas reporting program requirements as in effect on Dec. 31, 2025, in the manner specified in today’s guidance.

This notice also informs taxpayers that Treasury and IRS intend to issue regulations under section 45Q, including with respect to measurement and verification standards, and that taxpayers might depend on this guidance until the regulations are released.

The guidance mainly impacts companies that intend to claim credits for qualified carbon oxide captured in secure geological storage occurring in 2025.