What is the 45Q Carbon Capture Tax Credit?

Section 45Q of the Internal Revenue Code (IRC) is a federal tax credit designed to incentivize carbon capture and sequestration (CCS) projects in the United States. The 45Q tax credit provides a production-based incentive for each metric ton of carbon dioxide (CO₂) that is captured and permanently stored, rather than released into the atmosphere. Available to industrial facilities and power plants, the credit supports investment in carbon capture technology and long-term emissions reduction. By directly linking the value of the credit to the amount of CO₂ sequestered, Section 45Q plays a central role in advancing U.S. decarbonization and clean energy initiatives.