Carbon Reduction and Tax Credit Act

To amend the Internal Revenue Code of 1986 to impose an excise tax on fuel based on the carbon content of such fuel, and for other purposes. 1. Short title This Act may be cited as the Carbon Reduction and Tax Credit Act 2. Excise tax on carbon content of fuels (a) In general Chapter 38 E Carbon Content Fee Sec. 4691. Carbon content. 4691. Carbon content (a) In general In the case of a coal mine or an oil or gas well, there is hereby imposed a tax equal to $50 per ton of carbon contained in fuel produced— (1) at such mine or well located in the United States, or (2) entered into the United States for consumption, use, or warehousing. (b) Adjustment for years after 2023 (1) In general In the case of any calendar year after 2023, the amount under subsection (a) shall be increased by an amount equal to— (A) such amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined— (i) by substituting calendar year 2022 calendar year 2016 (ii) by substituting for the C–CPI–U referred to in section 1(f)(3)(A) the amount that such CPI would have been if the annual percentage increase in CPI with respect to each year after 2022 had been one percentage point greater. (2) Terms related to CPI (A) Annual percentage increase For purposes of subparagraph (B)(ii)(II), the term annual percentage increase (B) Other terms Terms used in this paragraph which are also used in section 1(f)(3) shall have the same meanings as when used in such section. (3) Rounding Any increase determined under subparagraph (B) shall be rounded to the nearest multiple of $50. . (b) Clerical amendment The table of subchapters for chapter 38 Subchapter E—Carbon Content fee . (c) Effective date The amendments made by this section shall apply to fuel produced after December 31, 2022. 3. Credit (a) In general Subpart C of part IV of subchapter A of chapter 1 36C. Credit for taxpayers (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each taxpayer who is an individual and each dependent of the taxpayer an amount equal to $1,000. (b) Limitation based on adjusted gross income The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $100 for each $1,000 (or fraction thereof) by which the taxpayer’s adjusted gross income exceeds $314,000 ($157,000 in the case of a return other than a joint return). (c) Inflation adjustment In the case of a taxable year beginning after 2023, the dollar amounts in subsections (a) and (b) shall be increased by an amount equal to— (1) such dollar amount, multiplied by (2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2022 2016 If any increase under this clause is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. (d) Nonresident alien ineligible for credit No credit shall be allowed under this section to any nonresident alien. . (b) Conforming amendments (1) Section 6211(b)(4)(A) of such Code is amended by inserting 36C, 36B, (2) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C, 36B, (3) The table of sections for subpart C of part IV of subchapter A of chapter 1 Sec. 36C. Credit for taxpayers. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2022.

Summary: Carbon Reduction and Tax Credit Act This bill imposes an excise tax on coal mines or oil or gas wells equal to $50 per ton of carbon contained in fuel produced at such mines or wells located in the United States, or entered into the United States for consumption, use, or warehousing. It also allows an individual taxpayer (other than a nonresident alien) a refundable income tax credit equal to $1,000, subject to a phaseout if the taxpayer's adjusted gross income exceeds a certain threshold amount. The dollar amounts in this bill are subject to a inflation adjustment in calendar years after 2023.