377 
† HR 1 EAS 
SEC. 70413. ADDITIONAL EXPENSES TREATED AS QUALI-
FIED HIGHER EDUCATION EXPENSES FOR 
PURPOSES OF 529 ACCOUNTS. 
(a) IN GENERAL.— 
(1) IN GENERAL.—Section 529(c)(7) is amended 
to read as follows: 
‘‘(7) TREATMENT
OF
ELEMENTARY
AND
SEC-
ONDARY TUITION.—Any reference in this section to 
the term ‘qualified higher education expense’ shall in-
clude a reference to the following expenses in connec-
tion with enrollment or attendance at, or for students 
enrolled at or attending, an elementary or secondary 
public, private, or religious school: 
‘‘(A) Tuition. 
‘‘(B) Curriculum and curricular materials. 
‘‘(C) Books or other instructional materials. 
‘‘(D) Online educational materials. 
‘‘(E) Tuition for tutoring or educational 
classes outside of the home, including at a tutor-
ing facility, but only if the tutor or instructor is 
not related to the student and— 
‘‘(i) is licensed as a teacher in any 
State, 
‘‘(ii) has taught at an eligible edu-
cational institution, or
378 
† HR 1 EAS 
‘‘(iii) is a subject matter expert in the 
relevant subject. 
‘‘(F) Fees for a nationally standardized 
norm-referenced achievement test, an advanced 
placement examination, or any examinations re-
lated to college or university admission. 
‘‘(G) Fees for dual enrollment in an institu-
tion of higher education. 
‘‘(H) Educational therapies for students 
with disabilities provided by a licensed or ac-
credited practitioner or provider, including occu-
pational, behavioral, physical, and speech-lan-
guage therapies.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to distributions made after 
the date of the enactment of this Act. 
(b) INCREASE IN LIMITATION.— 
(1) IN GENERAL.—The last sentence of section 
529(e)(3) is amended by striking ‘‘$10,000’’ and in-
serting ‘‘$20,000’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to taxable years beginning 
after December 31, 2025.
379 
† HR 1 EAS 
SEC. 70414. CERTAIN POSTSECONDARY CREDENTIALING EX-
PENSES TREATED AS QUALIFIED HIGHER 
EDUCATION EXPENSES FOR PURPOSES OF 529 
ACCOUNTS. 
(a) IN GENERAL.—Section 529(e)(3) is amended by 
adding at the end the following new subparagraph: 
‘‘(C) 
CERTAIN
POSTSECONDARY 
CREDENTIALING EXPENSES.—The term ‘qualified 
higher education expenses’ includes qualified 
postsecondary credentialing expenses (as defined 
in subsection (f)).’’. 
(b) QUALIFIED POSTSECONDARY CREDENTIALING EX-
PENSES.—Section 529 is amended by redesignating sub-
section (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection: 
‘‘(f) QUALIFIED POSTSECONDARY CREDENTIALING EX-
PENSES.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified postsec-
ondary credentialing expenses’ means— 
‘‘(A) tuition, fees, books, supplies, and 
equipment required for the enrollment or attend-
ance of a designated beneficiary in a recognized 
postsecondary credential program, or any other 
expense incurred in connection with enrollment 
in or attendance at a recognized postsecondary 
credential program if such expense would, if in-
380 
† HR 1 EAS 
curred in connection with enrollment or attend-
ance at an eligible educational institution, be 
covered under subsection (e)(3)(A), 
‘‘(B) fees for testing if such testing is re-
quired to obtain or maintain a recognized post-
secondary credential, and 
‘‘(C) fees for continuing education if such 
education is required to maintain a recognized 
postsecondary credential. 
‘‘(2) RECOGNIZED POSTSECONDARY CREDENTIAL 
PROGRAM.—The term ‘recognized postsecondary cre-
dential program’ means any program to obtain a rec-
ognized postsecondary credential if— 
‘‘(A) such program is included on a State 
list prepared under section 122(d) of the Work-
force Innovation and Opportunity Act (29 
U.S.C. 3152(d)), 
‘‘(B) such program is listed in the public 
directory of the Web Enabled Approval Manage-
ment System (WEAMS) of the Veterans Benefits 
Administration, or successor directory such pro-
gram, 
‘‘(C) an examination (developed or admin-
istered by an organization widely recognized as 
providing reputable credentials in the occupa-
381 
† HR 1 EAS 
tion) is required to obtain or maintain such cre-
dential and such organization recognizes such 
program as providing training or education 
which prepares individuals to take such exam-
ination, or 
‘‘(D) such program is identified by the Sec-
retary, after consultation with the Secretary of 
Labor, as being a reputable program for obtain-
ing a recognized postsecondary credential for 
purposes of this subparagraph. 
‘‘(3) RECOGNIZED
POSTSECONDARY
CREDEN-
TIAL.—The term ‘recognized postsecondary credential’ 
means— 
‘‘(A) any postsecondary employment creden-
tial that is industry recognized and is— 
‘‘(i) any postsecondary employment 
credential issued by a program that is ac-
credited by the Institute for Credentialing 
Excellence, the National Commission on 
Certifying Agencies, or the American Na-
tional Standards Institute, 
‘‘(ii) any postsecondary employment 
credential 
that 
is 
included 
in 
the 
Credentialing 
Opportunities 
On-Line 
(COOL) directory of credentialing programs
382 
† HR 1 EAS 
(or successor directory) maintained by the 
Department of Defense or by any branch of 
the Armed Forces, or 
‘‘(iii) any postsecondary employment 
credential identified for purposes of this 
clause by the Secretary, after consultation 
with the Secretary of Labor, as being indus-
try recognized, 
‘‘(B) any certificate of completion of an ap-
prenticeship that is registered and certified with 
the Secretary of Labor under the Act of August 
16, 1937 (commonly known as the ‘National Ap-
prenticeship Act’; 50 Stat. 664, chapter 663; 29 
U.S.C. 50 et seq.), 
‘‘(C) any occupational or professional li-
cense issued or recognized by a State or the Fed-
eral Government (and any certification that sat-
isfies a condition for obtaining such a license), 
and 
‘‘(D) any recognized postsecondary creden-
tial as defined in section 3(52) of the Workforce 
Innovation and Opportunity Act (29 U.S.C. 
3102(52)), provided through a program described 
in paragraph (2)(A).’’.
383 
† HR 1 EAS 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions made after the date of 
the enactment of this Act. 
SEC. 70415. MODIFICATION OF EXCISE TAX ON INVESTMENT 
INCOME OF CERTAIN PRIVATE COLLEGES 
AND UNIVERSITIES. 
(a) IN GENERAL.—Section 4968 is amended to read 
as follows: 
‘‘SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME OF 
PRIVATE COLLEGES AND UNIVERSITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on each 
applicable educational institution for the taxable year a tax 
equal to the applicable percentage of the net investment in-
come of such institution for the taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of this 
section, the term ‘applicable percentage’ means— 
‘‘(1) 1.4 percent in the case of an institution 
with a student adjusted endowment of at least 
$500,000, and not in excess of $750,000, 
‘‘(2) 4 percent in the case of an institution with 
a student adjusted endowment in excess of $750,000, 
and not in excess of $2,000,000, and 
‘‘(3) 8 percent in the case of an institution with 
a student adjusted endowment in excess of $2,000,000.
384 
† HR 1 EAS 
‘‘(c) APPLICABLE EDUCATIONAL INSTITUTION.—For 
purposes of this subchapter, the term ‘applicable edu-
cational institution’ means an eligible educational institu-
tion (as defined in section 25A(f)(2))— 
‘‘(1) which had at least 3,000 tuition-paying stu-
dents during the preceding taxable year, 
‘‘(2) more than 50 percent of the tuition-paying 
students of which are located in the United States, 
‘‘(3) the student adjusted endowment of which is 
at least $500,000, and 
‘‘(4) which is not described in the first sentence 
of section 511(a)(2)(B) (relating to State colleges and 
universities). 
‘‘(d) STUDENT ADJUSTED ENDOWMENT.—For pur-
poses of this section, the term ‘student adjusted endowment’ 
means, with respect to any institution for any taxable 
year— 
‘‘(1) the aggregate fair market value of the assets 
of such institution (determined as of the end of the 
preceding taxable year), other than those assets which 
are used directly in carrying out the institution’s ex-
empt purpose, divided by 
‘‘(2) the number of students of such institution. 
‘‘(e) DETERMINATION OF NUMBER OF STUDENTS.— 
For purposes of subsections (c) and (d), the number of stu-
385 
† HR 1 EAS 
dents of an institution (including for purposes of deter-
mining the number of students at a particular location) 
shall be based on the daily average number of full-time stu-
dents attending such institution (with part-time students 
taken into account on a full-time student equivalent basis). 
‘‘(f) NET INVESTMENT INCOME.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—Net investment income shall 
be determined under rules similar to the rules of sec-
tion 4940(c). 
‘‘(2) OVERRIDE OF CERTAIN REGULATORY EX-
CEPTIONS.— 
‘‘(A) STUDENT
LOAN
INTEREST.—Net in-
vestment income shall be determined by taking 
into account any interest income from a student 
loan made by the applicable educational institu-
tion (or any related organization) as gross in-
vestment income. 
‘‘(B) FEDERALLY-SUBSIDIZED ROYALTY IN-
COME.— 
‘‘(i) IN GENERAL.—Net investment in-
come shall be determined by taking into ac-
count any Federally-subsidized royalty in-
come as gross investment income.
386 
† HR 1 EAS 
‘‘(ii) FEDERALLY-SUBSIDIZED ROYALTY 
INCOME.—For purposes of this subpara-
graph— 
‘‘(I) 
IN
GENERAL.—The 
term 
‘Federally-subsidized royalty income’ 
means any otherwise-regulatory-exempt 
royalty income if any Federal funds 
were used in the research, development, 
or creation of the patent, copyright, or 
other intellectual or intangible prop-
erty from which such royalty income is 
derived. 
‘‘(II) 
OTHERWISE-REGULATORY- 
EXEMPT ROYALTY INCOME.—For pur-
poses of this subparagraph, the term 
‘otherwise-regulatory-exempt 
royalty 
income’ means royalty income which 
(but for this subparagraph) would not 
be taken into account as gross invest-
ment income by reason of being derived 
from patents, copyrights, or other intel-
lectual or intangible property which 
resulted from the work of students or 
faculty members in their capacities as
387 
† HR 1 EAS 
such with the applicable educational 
institution. 
‘‘(III) 
FEDERAL
FUNDS.—The 
term ‘Federal funds’ includes any 
grant made by, and any payment 
made under any contract with, any 
Federal agency to the applicable edu-
cational institution, any related orga-
nization, or any student or faculty 
member referred to in subclause (II). 
‘‘(g) ASSETS AND NET INVESTMENT INCOME OF RE-
LATED ORGANIZATIONS.— 
‘‘(1) IN GENERAL.—For purposes of subsections 
(d) and (f), assets and net investment income of any 
related organization with respect to an educational 
institution shall be treated as assets and net invest-
ment income, respectively, of the educational institu-
tion, except that— 
‘‘(A) no such amount shall be taken into ac-
count with respect to more than 1 educational 
institution, and 
‘‘(B) unless such organization is controlled 
by such institution or is described in section 
509(a)(3) with respect to such institution for the 
taxable year, assets and net investment income
388 
† HR 1 EAS 
which are not intended or available for the use 
or benefit of the educational institution shall not 
be taken into account. 
‘‘(2) RELATED ORGANIZATION.—For purposes of 
this subsection, the term ‘related organization’ means, 
with respect to an educational institution, any orga-
nization which— 
‘‘(A) controls, or is controlled by, such insti-
tution, 
‘‘(B) is controlled by 1 or more persons 
which also control such institution, or 
‘‘(C) is a supported organization (as de-
fined in section 509(f)(3)), or an organization 
described in section 509(a)(3), during the taxable 
year with respect to such institution. 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary to 
prevent avoidance of the tax under this section, including 
regulations or other guidance to prevent avoidance of such 
tax through the restructuring of endowment funds or other 
arrangements designed to reduce or eliminate the value of 
net investment income or assets subject to the tax imposed 
by this section.’’. 
(b) REQUIREMENT TO REPORT CERTAIN INFORMATION 
WITH RESPECT TO APPLICATION OF EXCISE TAX BASED
389 
† HR 1 EAS 
ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNI-
VERSITIES.—Section 6033 is amended by redesignating 
subsection (o) as subsection (p) and by inserting after sub-
section (n) the following new subsection: 
‘‘(o) REQUIREMENT TO REPORT CERTAIN INFORMA-
TION WITH RESPECT TO EXCISE TAX BASED ON INVEST-
MENT
INCOME
OF
PRIVATE
COLLEGES
AND
UNIVER-
SITIES.—Each applicable educational institution described 
in section 4968(c) which is subject to the requirements of 
subsection (a) shall include on the return required under 
subsection (a)— 
‘‘(1) the number of tuition-paying students taken 
into account under section 4968(c), and 
‘‘(2) the number of students of such institution 
(determined under the rules of section 4968(e)).’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70416. EXPANDING APPLICATION OF TAX ON EXCESS 
COMPENSATION WITHIN TAX-EXEMPT ORGA-
NIZATIONS. 
(a) IN GENERAL.—Section 4960(c)(2) is amended to 
read as follows: 
‘‘(2) COVERED EMPLOYEE.—For purposes of this 
section, the term ‘covered employee’ means any em-
390 
† HR 1 EAS 
ployee of an applicable tax-exempt organization (or 
any predecessor of such an organization) and any 
former employee of such an organization (or prede-
cessor) who was such an employee during any taxable 
year beginning after December 31, 2016.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 2025. 
Subchapter C—Permanent Investments in 
Community Development 
SEC. 70421. PERMANENT RENEWAL AND ENHANCEMENT OF 
OPPORTUNITY ZONES. 
(a) DECENNIAL DESIGNATIONS.— 
(1) DETERMINATION
PERIOD.—Section 1400Z- 
1(c)(2)(B) is amended by striking ‘‘beginning on the 
date of the enactment of the Tax Cuts and Jobs Act’’ 
and inserting ‘‘beginning on the decennial determina-
tion date’’. 
(2) DECENNIAL DETERMINATION DATE.—Section 
1400Z-1(c)(2) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) DECENNIAL DETERMINATION DATE.— 
The 
term 
‘decennial 
determination 
date’ 
means— 
‘‘(i) July 1, 2026, and
391 
† HR 1 EAS 
‘‘(ii) each July 1 of the year that is 10 
years after the preceding decennial deter-
mination date under this subparagraph.’’. 
(3) REPEAL
OF
SPECIAL
RULE
FOR
PUERTO 
RICO.—Section 1400Z-1(b) is amended by striking 
paragraph (3). 
(4) LIMITATION
ON
NUMBER
OF
DESIGNA-
TIONS.—Section 1400Z-1(d)(1) is amended— 
(A) in paragraph (1)— 
(i) by striking ‘‘and subsection (b)(3)’’, 
and 
(ii) by inserting ‘‘during any period’’ 
after ‘‘the number of population census 
tracts in a State that may be designated as 
qualified opportunity zones under this sec-
tion’’, and 
(B) in paragraph (2), by inserting ‘‘during 
any period’’ before the period at the end. 
(5) EFFECTIVE DATES.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by this 
subsection shall take effect on the date of the en-
actment of this Act.
392 
† HR 1 EAS 
(B) PUERTO RICO.—The amendment made 
by paragraph (3) shall take effect on December 
31, 2026. 
(b) QUALIFICATION FOR DESIGNATIONS.— 
(1) DETERMINATION
OF
LOW-INCOME
COMMU-
NITIES.—Section 1400Z-1(c) is amended by striking 
all that precedes paragraph (2) and inserting the fol-
lowing: 
‘‘(c) OTHER DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) LOW-INCOME
COMMUNITIES.—The term 
‘low-income community’ means any population cen-
sus tract if— 
‘‘(A) such population census tract has a me-
dian family income that— 
‘‘(i) in the case of a population census 
tract not located within a metropolitan 
area, does not exceed 70 percent of the state-
wide median family income, or 
‘‘(ii) in the case of a population census 
tract located within a metropolitan area, 
does not exceed 70 percent of the metropoli-
tan area median family income, or 
‘‘(B) such population census tract—
393 
† HR 1 EAS 
‘‘(i) has a poverty rate of at least 20 
percent, and 
‘‘(ii) has a median family income 
that— 
‘‘(I) in the case of a population 
census tract not located within a met-
ropolitan area, does not exceed 125 
percent of the statewide median family 
income, or 
‘‘(II) in the case of a population 
census tract located within a metro-
politan area, does not exceed 125 per-
cent of the metropolitan area median 
family income.’’. 
(2) REPEAL OF RULE FOR CONTIGUOUS CENSUS 
TRACTS.—Section 1400Z-1 is amended by striking 
subsection (e) and by redesignating subsection (f) as 
subsection (e). 
(3) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—Section 1400Z-1(e), as redesignated by para-
graph (2), is amended to read as follows: 
‘‘(e) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.— 
‘‘(1) IN GENERAL.—A designation as a qualified 
opportunity zone shall remain in effect for the period
394 
† HR 1 EAS 
beginning on the applicable start date and ending on 
the day before the date that is 10 years after the ap-
plicable start date. 
‘‘(2) APPLICABLE START DATE.—For purposes of 
this section, the term ‘applicable start date’ means, 
with respect to any qualified opportunity zone des-
ignated under this section, the January 1 following 
the date on which such qualified opportunity zone 
was certified and designated by the Secretary under 
subsection (b)(1)(B).’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to areas designated 
under section 1400Z-1 of the Internal Revenue Code 
of 1986 after the date of the enactment of this Act. 
(c) APPLICATION OF SPECIAL RULES FOR CAPITAL 
GAINS.— 
(1) REPEAL OF SUNSET ON ELECTION.—Section 
1400Z-2(a)(2) is amended to read as follows: 
‘‘(2) ELECTION.—No election may be made 
under paragraph (1) with respect to a sale or ex-
change if an election previously made with respect to 
such sale or exchange is in effect.’’. 
(2) MODIFICATION OF RULES FOR DEFERRAL OF 
GAIN.—Section 1400Z-2(b) is amended to read as fol-
lows:
395 
† HR 1 EAS 
‘‘(b) DEFERRAL OF GAIN INVESTED IN OPPORTUNITY 
ZONE PROPERTY.— 
‘‘(1) YEAR OF INCLUSION.—Gain to which sub-
section (a)(1)(B) applies shall be included in gross in-
come in the taxable year which includes the earlier 
of— 
‘‘(A) the date on which such investment is 
sold or exchanged, or 
‘‘(B) the date which is 5 years after the date 
the investment in the qualified opportunity fund 
was made. 
‘‘(2) AMOUNT INCLUDIBLE.— 
‘‘(A) IN GENERAL.—The amount of gain in-
cluded 
in 
gross 
income 
under 
subsection 
(a)(1)(B) shall be the excess of— 
‘‘(i) the lesser of the amount of gain ex-
cluded under subsection (a)(1)(A) or the 
fair market value of the investment as deter-
mined as of the date described in paragraph 
(1), over 
‘‘(ii) the taxpayer’s basis in the invest-
ment. 
‘‘(B) DETERMINATION OF BASIS.— 
‘‘(i) IN GENERAL.—Except as otherwise 
provided in this subparagraph or subsection
396 
† HR 1 EAS 
(c), the taxpayer’s basis in the investment 
shall be zero. 
‘‘(ii) INCREASE FOR GAIN RECOGNIZED 
UNDER SUBSECTION (a)(1)(B).—The basis 
in the investment shall be increased by the 
amount of gain recognized by reason of sub-
section (a)(1)(B) with respect to such in-
vestment. 
‘‘(iii) INVESTMENTS
HELD
FOR
YEARS.— 
‘‘(I) IN GENERAL.—In the case of 
any investment held for at least 5 
years, the basis of such investment 
shall be increased by an amount equal 
to 10 percent (30 percent in the case of 
any investment in a qualified rural 
opportunity fund) of the amount of 
gain deferred by reason of subsection 
(a)(1)(A). 
‘‘(II) 
APPLICATION
OF
IN-
CREASE.—For purposes of this sub-
section, any increase in basis under 
this clause shall be treated as occurring 
before the date described in paragraph 
(1)(B).
397 
† HR 1 EAS 
‘‘(C) 
QUALIFIED
RURAL
OPPORTUNITY 
FUND.—For purposes of subparagraph (B)(iii)— 
‘‘(i) QUALIFIED RURAL OPPORTUNITY 
FUND.—The term ‘qualified rural oppor-
tunity fund’ means a qualified opportunity 
fund that holds at least 90 percent of its as-
sets in qualified opportunity zone property 
which— 
‘‘(I) is qualified opportunity zone 
business property substantially all of 
the use of which, during substantially 
all of the fund’s holding period for such 
property, was in a qualified oppor-
tunity zone comprised entirely of a 
rural area, or 
‘‘(II) is qualified opportunity 
zone stock, or a qualified opportunity 
zone partnership interest, in a quali-
fied opportunity zone business in 
which substantially all of the tangible 
property owned or leased is qualified 
opportunity zone business property de-
scribed in subsection (d)(3)(A)(i) and 
substantially all the use of which is in
398 
† HR 1 EAS 
a qualified opportunity zone comprised 
entirely of a rural area. 
For purposes of the preceding sentence, 
property held in the fund shall be measured 
under rules similar to the rules of sub-
section (d)(1). 
‘‘(ii) RURAL AREA.—The term ‘rural 
area’ means any area other than— 
‘‘(I) a city or town that has a 
population of greater than 50,000 in-
habitants, and 
‘‘(II) any urbanized area contig-
uous and adjacent to a city or town 
described in subclause (I).’’. 
(3) SPECIAL RULE FOR INVESTMENTS HELD AT 
LEAST 10 YEARS.—Section 1400Z-2(c) is amended by 
striking ‘‘makes an election under this clause’’ and all 
that follows and inserting ‘‘makes an election under 
this subsection, the basis of such investment shall be 
equal to— 
‘‘(A) in the case of an investment sold before 
the date that is 30 years after the date of the in-
vestment, the fair market value of such invest-
ment on the date such investment is sold or ex-
changed, or
399 
† HR 1 EAS 
‘‘(B) in any other case, the fair market 
value of such investment on the date that is 30 
years after the date of the investment.’’. 
(4) DETERMINATION
OF
QUALIFIED
OPPOR-
TUNITY ZONE PROPERTY.— 
(A) QUALIFIED OPPORTUNITY ZONE BUSI-
NESS
PROPERTY.—Section 
1400Z- 
2(d)(2)(D)(i)(I) is amended by striking ‘‘Decem-
ber 31, 2017’’ and inserting ‘‘the applicable start 
date (as defined in section 1400Z-1(e)(2)) with 
respect to the qualified opportunity zone de-
scribed in subclause (III)’’. 
(B) QUALIFIED OPPORTUNITY ZONE STOCK 
AND PARTNERSHIP INTERESTS.—Section 1400Z- 
2(d)(2) is amended— 
(i) by striking ‘‘December 31, 2017,’’ 
each place it appears in subparagraphs 
(B)(i)(I) and (C)(i) and inserting ‘‘the ap-
plicable date’’, and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(E) APPLICABLE DATE.—For purposes of 
this subparagraph, the term ‘applicable date’ 
means, with respect to any corporation or part-
nership which is a qualified opportunity zone
400 
† HR 1 EAS 
business, the earliest date described in subpara-
graph (D)(i)(I) with respect to the qualified op-
portunity zone business property held by such 
qualified opportunity zone business.’’. 
(C) SPECIAL RULE FOR IMPROVEMENT OF 
EXISTING STRUCTURES IN RURAL AREAS.—Sec-
tion 1400Z–2(d)(2)(D)(ii) is amended by insert-
ing ‘‘(50 percent of such adjusted basis in the 
case of property in a qualified opportunity zone 
comprised entirely of a rural area (as defined in 
subsection (b)(2)(C)(ii))’’ after ‘‘the adjusted 
basis of such property’’. 
(5) EFFECTIVE DATES.— 
(A) IN GENERAL.—Except as otherwise pro-
vided in this paragraph, the amendments made 
by this subsection shall apply to amounts in-
vested in qualified opportunity funds after De-
cember 31, 2026. 
(B) ACQUISITION
OF
QUALIFIED
OPPOR-
TUNITY
ZONE
PROPERTY.—The 
amendments 
made by subparagraphs (A) and (B) of para-
graph (4) shall apply to property acquired after 
December 31, 2026.
401 
† HR 1 EAS 
(C) 
SUBSTANTIAL
IMPROVEMENT.—The 
amendment made by paragraph (4)(C) shall take 
effect on the date of the enactment of this Act. 
(d) INFORMATION REPORTING ON QUALIFIED OPPOR-
TUNITY FUNDS
AND QUALIFIED RURAL OPPORTUNITY 
FUNDS.— 
(1) FILING REQUIREMENTS FOR FUNDS AND IN-
VESTORS.—Subpart A of part III of subchapter A of 
chapter 61 is amended by inserting after section 
6039J the following new sections: 
‘‘SEC. 6039K. RETURNS WITH RESPECT TO QUALIFIED OP-
PORTUNITY FUNDS AND QUALIFIED RURAL 
OPPORTUNITY FUNDS. 
‘‘(a) IN GENERAL.—Every qualified opportunity fund 
shall file an annual return (at such time and in such man-
ner as the Secretary may prescribe) containing the informa-
tion described in subsection (b). 
‘‘(b) INFORMATION FROM QUALIFIED OPPORTUNITY 
FUNDS.—The information described in this subsection is— 
‘‘(1) the name, address, and taxpayer identifica-
tion number of the qualified opportunity fund, 
‘‘(2) whether the qualified opportunity fund is 
organized as a corporation or a partnership,
402 
† HR 1 EAS 
‘‘(3) the value of the total assets held by the 
qualified opportunity fund as of each date described 
in section 1400Z–2(d)(1), 
‘‘(4) the value of all qualified opportunity zone 
property held by the qualified opportunity fund on 
each such date, 
‘‘(5) with respect to each investment held by the 
qualified opportunity fund in qualified opportunity 
zone stock or a qualified opportunity zone partner-
ship interest— 
‘‘(A) the name, address, and taxpayer iden-
tification number of the corporation in which 
such stock is held or the partnership in which 
such interest is held, as the case may be, 
‘‘(B) each North American Industry Classi-
fication System (NAICS) code that applies to the 
trades or businesses conducted by such corpora-
tion or partnership, 
‘‘(C) the population census tract or popu-
lation census tracts in which the qualified oppor-
tunity zone business property of such corporation 
or partnership is located, 
‘‘(D) the amount of the investment in such 
stock or partnership interest as of each date de-
scribed in section 1400Z–2(d)(1),
403 
† HR 1 EAS 
‘‘(E) the value of tangible property held by 
such corporation or partnership on each such 
date which is owned by such corporation or 
partnership, 
‘‘(F) the value of tangible property held by 
such corporation or partnership on each such 
date which is leased by such corporation or part-
nership, 
‘‘(G) the approximate number of residential 
units (if any) for any real property held by such 
corporation or partnership, and 
‘‘(H) the approximate average monthly 
number of full-time equivalent employees of such 
corporation or partnership for the year (within 
numerical ranges identified by the Secretary) or 
such other indication of the employment impact 
of such corporation or partnership as determined 
appropriate by the Secretary, 
‘‘(6) with respect to the items of qualified oppor-
tunity zone business property held by the qualified 
opportunity fund— 
‘‘(A) the North American Industry Classi-
fication System (NAICS) code that applies to the 
trades or businesses in which such property is 
held,
404 
† HR 1 EAS 
‘‘(B) the population census tract in which 
the property is located, 
‘‘(C) whether the property is owned or 
leased, 
‘‘(D) the aggregate value of the items of 
qualified opportunity zone property held by the 
qualified opportunity fund as of each date de-
scribed in section 1400Z–2(d)(1), and 
‘‘(E) in the case of real property, the num-
ber of residential units (if any), 
‘‘(7) the approximate average monthly number of 
full-time equivalent employees for the year of the 
trades or businesses of the qualified opportunity fund 
in which qualified opportunity zone business property 
is held (within numerical ranges identified by the 
Secretary) or such other indication of the employment 
impact of such trades or businesses as determined ap-
propriate by the Secretary, 
‘‘(8) with respect to each person who disposed of 
an investment in the qualified opportunity fund dur-
ing the year— 
‘‘(A) the name, address, and taxpayer iden-
tification number of such person, 
‘‘(B) the date or dates on which the invest-
ment disposed was acquired, and
405 
† HR 1 EAS 
‘‘(C) the date or dates on which any such 
investment was disposed and the amount of the 
investment disposed, and 
‘‘(9) such other information as the Secretary 
may require. 
‘‘(c) STATEMENT REQUIRED TO BE FURNISHED TO IN-
VESTORS.—Every person required to make a return under 
subsection (a) shall furnish to each person whose name is 
required to be set forth in such return by reason of sub-
section (b)(8) (at such time and in such manner as the Sec-
retary may prescribe) a written statement showing— 
‘‘(1) the name, address, and phone number of the 
information contact of the person required to make 
such return, and 
‘‘(2) the information required to be shown on 
such return by reason of subsection (b)(8) with respect 
to the person whose name is required to be so set 
forth. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) IN GENERAL.—Any term used in this sec-
tion which is also used in subchapter Z of chapter 1 
shall have the meaning given such term under such 
subchapter.
406 
† HR 1 EAS 
‘‘(2) FULL-TIME EQUIVALENT EMPLOYEES.—The 
term ‘full-time equivalent employees’ means, with re-
spect to any month, the sum of— 
‘‘(A) the number of full-time employees (as 
defined in section 4980H(c)(4)) for the month, 
plus 
‘‘(B) the number of employees determined 
(under rules similar to the rules of section 
4980H(c)(2)(E)) by dividing the aggregate num-
ber of hours of service of employees who are not 
full-time employees for the month by 120. 
‘‘(e) APPLICATION
TO QUALIFIED RURAL OPPOR-
TUNITY FUNDS.—Every qualified rural opportunity fund 
(as defined in section 1400Z–2(b)(2)(C)) shall file the an-
nual return required under subsection (a), and the state-
ments required under subsection (c), applied— 
‘‘(1) by substituting ‘qualified rural opportunity’ 
for ‘qualified opportunity’ each place it appears, 
‘‘(2) by substituting ‘section 1400Z–2(b)(2)(C)’ 
for ‘section 1400Z–2(d)(1)’ each place it appears, and 
‘‘(3) by treating any reference (after the applica-
tion of paragraph (1)) to qualified rural opportunity 
zone stock, a qualified rural opportunity zone part-
nership interest, a qualified rural opportunity zone 
business, or qualified opportunity zone business prop-
407 
† HR 1 EAS 
erty as stock, an interest, a business, or property, re-
spectively, described in subclause (I) or (II), as the 
case may be, of section 1400Z–2(b)(2)(C)(i). 
‘‘SEC. 6039L. INFORMATION REQUIRED FROM QUALIFIED 
OPPORTUNITY 
ZONE 
BUSINESSES 
AND 
QUALIFIED RURAL OPPORTUNITY ZONE BUSI-
NESSES. 
‘‘(a) IN GENERAL.—Every applicable qualified oppor-
tunity zone business shall furnish to the qualified oppor-
tunity fund described in subsection (b) a written statement 
at such time, in such manner, and setting forth such infor-
mation as the Secretary may by regulations prescribe for 
purposes of enabling such qualified opportunity fund to 
meet the requirements of section 6039K(b)(5). 
‘‘(b) APPLICABLE QUALIFIED OPPORTUNITY ZONE 
BUSINESS.—For purposes of subsection (a), the term ‘appli-
cable qualified opportunity zone business’ means any quali-
fied opportunity zone business— 
‘‘(1) which is a trade or business of a qualified 
opportunity fund, 
‘‘(2) in which a qualified opportunity fund holds 
qualified opportunity zone stock, or 
‘‘(3) in which a qualified opportunity fund holds 
a qualified opportunity zone partnership interest.
408 
† HR 1 EAS 
‘‘(c) OTHER TERMS.—Any term used in this section 
which is also used in subchapter Z of chapter 1 shall have 
the meaning given such term under such subchapter. 
‘‘(d) APPLICATION
TO QUALIFIED RURAL OPPOR-
TUNITY BUSINESSES.—Every applicable qualified rural op-
portunity zone business (as defined in subsection (b) deter-
mined after application of the substitutions described in 
this sentence) shall furnish the written statement required 
under subsection (a), applied— 
‘‘(1) by substituting ‘qualified rural opportunity’ 
for ‘qualified opportunity’ each place it appears, and 
‘‘(2) by treating any reference (after the applica-
tion of paragraph (1)) to qualified rural opportunity 
zone stock, a qualified rural opportunity zone part-
nership interest, or a qualified rural opportunity zone 
business as stock, an interest, or a business, respec-
tively, described in subclause (I) or (II), as the case 
may be, of section 1400Z–2(b)(2)(C)(i).’’. 
(2) PENALTIES.— 
(A) IN GENERAL.—Part II of subchapter B 
of chapter 68 is amended by inserting after sec-
tion 6725 the following new section:
409 
† HR 1 EAS 
‘‘SEC. 6726. FAILURE TO COMPLY WITH INFORMATION RE-
PORTING 
REQUIREMENTS 
RELATING 
TO 
QUALIFIED 
OPPORTUNITY 
FUNDS 
AND 
QUALIFIED RURAL OPPORTUNITY FUNDS. 
‘‘(a) IN GENERAL.—If any person required to file a 
return under section 6039K fails to file a complete and cor-
rect return under such section in the time and in the man-
ner prescribed therefor, such person shall pay a penalty of 
$500 for each day during which such failure continues. 
‘‘(b) LIMITATION.— 
‘‘(1) IN
GENERAL.—The maximum penalty 
under this section on failures with respect to any 1 
return shall not exceed $10,000. 
‘‘(2) LARGE QUALIFIED OPPORTUNITY FUNDS.— 
In the case of any failure described in subsection (a) 
with respect to a fund the gross assets of which (deter-
mined on the last day of the taxable year) are in ex-
cess of $10,000,000, paragraph (1) shall be applied by 
substituting ‘$50,000’ for ‘$10,000’. 
‘‘(c) PENALTY
IN
CASES
OF
INTENTIONAL
DIS-
REGARD.—If a failure described in subsection (a) is due 
to intentional disregard, then— 
‘‘(1) subsection (a) shall be applied by sub-
stituting ‘$2,500’ for ‘$500’, 
‘‘(2) subsection (b)(1) shall be applied by sub-
stituting ‘$50,000’ for ‘$10,000’, and
410 
† HR 1 EAS 
‘‘(3) subsection (b)(2) shall be applied by sub-
stituting ‘$250,000’ for ‘$50,000’. 
‘‘(d) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any failure re-
lating to a return required to be filed in a calendar 
year beginning after 2025, each of the dollar amounts 
in subsections (a), (b), and (c) shall be increased by 
an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year 
determined by substituting ‘calendar year 2024’ 
for ‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.— 
‘‘(A) IN
GENERAL.—If the $500 dollar 
amount in subsection (a) and (c)(1) or the 
$2,500 amount in subsection (c)(1), after being 
increased under paragraph (1), is not a multiple 
of $10, such dollar amount shall be rounded to 
the next lowest multiple of $10. 
‘‘(B) 
ASSET
THRESHOLD.—If 
the 
$10,000,000 dollar amount in subsection (b)(2), 
after being increased under paragraph (1), is not 
a multiple of $10,000, such dollar amount shall
411 
† HR 1 EAS 
be rounded to the next lowest multiple of 
$10,000. 
‘‘(C) OTHER
DOLLAR
AMOUNTS.—If any 
dollar amount in subsection (b) or (c) (other 
than any amount to which subparagraph (A) or 
(B) applies), after being increased under para-
graph (1), is not a multiple of $1,000, such dol-
lar amount shall be rounded to the next lowest 
multiple of $1,000.’’. 
(B) INFORMATION REQUIRED TO BE SENT 
TO OTHER TAXPAYERS.—Section 6724(d)(2), as 
amended by the preceding provisions of this Act, 
is amended— 
(i) by striking ‘‘or’’ at the end of sub-
paragraph (LL), 
(ii) by striking the period at the end of 
subparagraph 
(MM) 
and 
inserting 
a 
comma, and 
(iii) by inserting after subparagraph 
(MM) the following new subparagraphs: 
‘‘(NN) section 6039K(c) (relating to disposi-
tion of qualified opportunity fund investments), 
or 
‘‘(OO) section 6039L (relating to informa-
tion required from certain qualified opportunity
412 
† HR 1 EAS 
zone businesses and qualified rural opportunity 
zone businesses).’’. 
(3) ELECTRONIC
FILING.—Section 6011(e) is 
amended by adding at the end the following new 
paragraph: 
‘‘(8) QUALIFIED
OPPORTUNITY
FUNDS
AND 
QUALIFIED
RURAL
OPPORTUNITY
FUNDS.—Notwith-
standing paragraphs (1) and (2), any return filed by 
a qualified opportunity fund or qualified rural op-
portunity fund under section 6039K shall be filed on 
magnetic media or other machine-readable form.’’. 
(4) CLERICAL AMENDMENTS.— 
(A) The table of sections for subpart A of 
part III of subchapter A of chapter 61 is amend-
ed by inserting after the item relating to section 
6039J the following new items: 
‘‘Sec. 6039K. Returns with respect to qualified opportunity funds and qualified 
rural opportunity funds. 
‘‘Sec. 6039L. Information required from qualified opportunity zone businesses 
and qualified rural opportunity zone businesses.’’. 
(B) The table of sections for part II of sub-
chapter B of chapter 68 is amended by inserting 
after the item relating to section 6725 the fol-
lowing new item: 
‘‘Sec. 6726. Failure to comply with information reporting requirements relating 
to qualified opportunity funds and qualified rural opportunity 
funds.’’.
413 
† HR 1 EAS 
(5) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act. 
(e) SECRETARY REPORTING
OF DATA
ON OPPOR-
TUNITY ZONE AND RURAL OPPORTUNITY ZONE TAX INCEN-
TIVES.— 
(1) IN GENERAL.—In addition to amounts other-
wise available, there is appropriated, out of any 
money in the Treasury not otherwise appropriated, 
$15,000,000, to remain available until September 30, 
2028, for necessary expenses of the Internal Revenue 
Service to make the reports described in paragraph 
(2). 
(2) REPORTS.—As soon as practical after the 
date of the enactment of this Act, and annually there-
after, the Secretary of the Treasury, or the Secretary’s 
delegate (referred to in this section as the ‘‘Sec-
retary’’) shall make publicly available a report on 
qualified opportunity funds. 
(3) INFORMATION
INCLUDED.—The report re-
quired under paragraph (2) shall include, to the ex-
tent available, the following information: 
(A) The number of qualified opportunity 
funds.
414 
† HR 1 EAS 
(B) The aggregate dollar amount of assets 
held in qualified opportunity funds. 
(C) The aggregate dollar amount of invest-
ments made by qualified opportunity funds in 
qualified opportunity fund property, stated sepa-
rately for each North American Industry Classi-
fication System (NAICS) code. 
(D) The percentage of population census 
tracts designated as qualified opportunity zones 
that have received qualified opportunity fund in-
vestments. 
(E) For each population census tract des-
ignated as a qualified opportunity zone, the ap-
proximate average monthly number of full-time 
equivalent employees of the qualified opportunity 
zone businesses in such qualified opportunity 
zone for the preceding 12-month period (within 
numerical ranges identified by the Secretary) or 
such other indication of the employment impact 
of such qualified opportunity fund businesses as 
determined appropriate by the Secretary. 
(F) The percentage of the total amount of 
investments made by qualified opportunity funds 
in—
415 
† HR 1 EAS 
(i) qualified opportunity zone property 
which is real property; and 
(ii) other qualified opportunity zone 
property. 
(G) For each population census tract, the 
aggregate approximate number of residential 
units resulting from investments made by quali-
fied opportunity funds in real property. 
(H) The aggregate dollar amount of invest-
ments made by qualified opportunity funds in 
each population census tract. 
(4) ADDITIONAL INFORMATION.— 
(A) IN GENERAL.—Beginning with the re-
port submitted under paragraph (2) for the 6th 
year after the date of the enactment of this Act, 
the Secretary shall include in such report the im-
pacts and outcomes of a designation of a popu-
lation census tract as a qualified opportunity 
zone as measured by economic indicators, such 
as job creation, poverty reduction, new business 
starts, and other metrics as determined by the 
Secretary. 
(B) SEMI-DECENNIAL INFORMATION.— 
(i) IN GENERAL.—In the case of any 
report submitted under paragraph (2) in
416 
† HR 1 EAS 
the 6th year or the 11th year after the date 
of the enactment of this Act, the Secretary 
shall include the following information: 
(I) For population census tracts 
designated as a qualified opportunity 
zone, a comparison (based on aggregate 
information) of the factors listed in 
clause (iii) between the 5-year period 
ending on the date of the enactment of 
Public Law 115–97 and the most re-
cent 5-year period for which data is 
available. 
(II) For population census tracts 
designated as a qualified opportunity 
zone, a comparison (based on aggregate 
information) of the factors listed in 
clause (iii) for the most recent 5-year 
period for which data is available be-
tween such population census tracts 
and similar population census tracts 
that were not designated as a qualified 
opportunity zone. 
(ii) CONTROL GROUPS.—For purposes 
of clause (i), the Secretary may combine 
population census tracts into such groups as
417 
† HR 1 EAS 
the Secretary determines appropriate for 
purposes of making comparisons. 
(iii) FACTORS
LISTED.—The factors 
listed in this clause are the following: 
(I) The unemployment rate. 
(II) The number of persons work-
ing in the population census tract, in-
cluding the percentage of such persons 
who were not residents in the popu-
lation census tract in the preceding 
year. 
(III) 
Individual, 
family, 
and 
household poverty rates. 
(IV) Median family income of 
residents of the population census 
tract. 
(V) Demographic information on 
residents of the population census 
tract, including age, income, edu-
cation, race, and employment. 
(VI) The average percentage of in-
come of residents of the population cen-
sus tract spent on rent annually. 
(VII) The number of residences in 
the population census tract.
418 
† HR 1 EAS 
(VIII) The rate of home ownership 
in the population census tract. 
(IX) The average value of residen-
tial property in the population census 
tract. 
(X) The number of affordable 
housing units in the population census 
tract. 
(XI) The number of new business 
starts in the population census tract. 
(XII) The distribution of employ-
ees in the population census tract by 
North American Industry Classifica-
tion System (NAICS) code. 
(5) PROTECTION OF IDENTIFIABLE RETURN IN-
FORMATION.—In making reports required under this 
subsection, the Secretary— 
(A) shall establish appropriate procedures 
to ensure that any amounts reported do not dis-
close taxpayer return information that can be 
associated with any particular taxpayer or com-
petitive or proprietary information, and 
(B) if necessary to protect taxpayer return 
information, may combine information required
419 
† HR 1 EAS 
with respect to individual population census 
tracts into larger geographic areas. 
(6) DEFINITIONS.—Any term used in this sub-
section which is also used in subchapter Z of chapter 
1 of the Internal Revenue Code of 1986 shall have the 
meaning given such term under such subchapter. 
(7) REPORTS
ON
QUALIFIED
RURAL
OPPOR-
TUNITY FUNDS.—The Secretary shall make publicly 
available, with respect to qualified rural opportunity 
funds, separate reports as required under this sub-
section, applied— 
(A) by substituting ‘‘qualified rural oppor-
tunity’’ for ‘‘qualified opportunity’’ each place it 
appears, 
(B) by substituting a reference to this Act 
for ‘‘Public Law 115–97’’, and 
(C) by treating any reference (after the ap-
plication of subparagraph (A)) to qualified rural 
opportunity zone stock, qualified rural oppor-
tunity zone partnership interest, qualified rural 
opportunity zone business, or qualified oppor-
tunity zone business property as stock, interest, 
business, or property, respectively, described in 
subclause (I) or (II), as the case may be, of sec-
420 
† HR 1 EAS 
tion 1400Z–2(b)(2)(C)(i) of the Internal Revenue 
Code of 1986. 
SEC. 70422. PERMANENT ENHANCEMENT OF LOW-INCOME 
HOUSING TAX CREDIT. 
(a) PERMANENT STATE HOUSING CREDIT CEILING IN-
CREASE FOR LOW-INCOME HOUSING CREDIT.— 
(1) IN GENERAL.—Section 42(h)(3)(I) is amend-
ed— 
(A) by striking ‘‘2018, 2019, 2020, and 
2021,’’ and inserting ‘‘beginning after December 
31, 2025,’’, 
(B) by striking ‘‘1.125’’ and inserting 
‘‘1.12’’, and 
(C) by striking ‘‘2018, 2019, 2020, AND 2021’’ 
in the heading and inserting ‘‘CALENDAR YEARS 
AFTER 2025’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to calendar years begin-
ning after December 31, 2025. 
(b) TAX-EXEMPT BOND FINANCING REQUIREMENT.— 
(1) IN GENERAL.—Section 42(h)(4) is amended 
by striking subparagraph (B) and inserting the fol-
lowing: 
‘‘(B) SPECIAL RULE WHERE MINIMUM PER-
CENT OF BUILDINGS IS FINANCED WITH TAX-EX-
421 
† HR 1 EAS 
EMPT
BONDS
SUBJECT
TO
VOLUME
CAP.—For 
purposes of subparagraph (A), paragraph (1) 
shall not apply to any portion of the credit al-
lowable under subsection (a) with respect to a 
building if— 
‘‘(i) 50 percent or more of the aggre-
gate basis of such building and the land on 
which the building is located is financed by 
1 or more obligations described in subpara-
graph (A), or 
‘‘(ii)(I) 25 percent or more of the ag-
gregate basis of such building and the land 
on which the building is located is financed 
by 1 or more obligations described in sub-
paragraph (A), and 
‘‘(II) 1 or more of such obligations— 
‘‘(aa) are part of an issue the 
issue date of which is after December 
31, 2025, and 
‘‘(bb) provide the financing for 
not less than 5 percent of the aggregate 
basis of such building and the land on 
which the building is located.’’. 
(2) EFFECTIVE DATE.—
422 
† HR 1 EAS 
(A) IN
GENERAL.—The amendment made 
by this subsection shall apply to buildings placed 
in service in taxable years beginning after De-
cember 31, 2025. 
(B) 
REHABILITATION
EXPENDITURES 
TREATED AS SEPARATE NEW BUILDING.—In the 
case of any building with respect to which any 
expenditures are treated as a separate new build-
ing under section 42(e) of the Internal Revenue 
Code of 1986, for purposes of subparagraph (A), 
both the existing building and the separate new 
building shall be treated as having been placed 
in service on the date such expenditures are 
treated as placed in service under section 
42(e)(4) of such Code. 
SEC. 70423. PERMANENT EXTENSION OF NEW MARKETS TAX 
CREDIT. 
(a) IN GENERAL.—Section 45D(f)(1)(H) is amended 
by striking ‘‘for for each of calendar years 2020 through 
2025’’ and inserting ‘‘ for each calendar year after 2019’’. 
(b) CARRYOVER
OF UNUSED LIMITATION.—Section 
45D(f)(3) is amended— 
(1) by striking ‘‘If the’’ and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.—If the’’, and
423 
† HR 1 EAS 
(2) by striking the second sentence and inserting 
the following: 
‘‘(B) LIMITATION.—No amount may be car-
ried under subparagraph (A) to any calendar 
year afer the fifth calendar year after the cal-
endar year in which the excess described in such 
subparagraph occurred. For purposes of this sub-
paragraph, any excess described in subparagraph 
(A) with respect to any calendar year before 
2026 shall be treated as occurring in calendar 
year 2025.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to calendar years beginning after De-
cember 31, 2025. 
SEC. 70424. PERMANENT AND EXPANDED REINSTATEMENT 
OF PARTIAL DEDUCTION FOR CHARITABLE 
CONTRIBUTIONS OF INDIVIDUALS WHO DO 
NOT ELECT TO ITEMIZE. 
(a) IN GENERAL.—Section 170(p) is amended— 
(1) by striking ‘‘$300 ($600’’ and inserting 
‘‘$1,000 ($2,000’’, and 
(2) by striking ‘‘beginning in 2021’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025.
424 
† HR 1 EAS 
SEC. 70425. 0.5 PERCENT FLOOR ON DEDUCTION OF CON-
TRIBUTIONS MADE BY INDIVIDUALS. 
(a) IN GENERAL.— 
(1) IN
GENERAL.—Paragraph (1) of section 
170(b) is amended by adding at the end the following 
new subparagraph: 
‘‘(I) 0.5-PERCENT FLOOR.—Any charitable 
contribution otherwise allowable (without regard 
to this subparagraph) as a deduction under this 
section shall be allowed only to the extent that 
the aggregate of such contributions exceeds 0.5 
percent of the taxpayer’s contribution base for 
the taxable year. The preceding sentence shall be 
applied— 
‘‘(i) first, by taking into account chari-
table contributions to which subparagraph 
(D) applies to the extent thereof, 
‘‘(ii) second, by taking into account 
charitable contributions to which subpara-
graph (C) applies to the extent thereof, 
‘‘(iii) third, by taking into account 
charitable contributions to which subpara-
graph (B) applies to the extent thereof, 
‘‘(iv) fourth, by taking into account 
charitable contributions to which subpara-
graph (E) applies to the extent thereof,
425 
† HR 1 EAS 
‘‘(v) fifth, by taking into account char-
itable contributions to which subparagraph 
(A) applies to the extent thereof, and 
‘‘(vi) sixth, by taking into account 
charitable contributions to which subpara-
graph (G) applies to the extent thereof.’’. 
(2) APPLICATION
OF
CARRYFORWARD.—Para-
graph (1) of section 170(d) is amended by adding at 
the end the following new subparagraph: 
‘‘(C) CONTRIBUTIONS DISALLOWED BY 0.5- 
PERCENT FLOOR CARRIED FORWARD ONLY FROM 
YEARS IN WHICH LIMITATION IS EXCEEDED.— 
‘‘(i) IN GENERAL.—In the case of any 
taxable year from which an excess is carried 
forward (determined without regard to this 
subparagraph) under any carryover rule, 
the applicable carryover rule shall be ap-
plied by increasing the excess determined 
under such applicable carryover rule for the 
contribution year (before the application of 
subparagraph (B)) by the amount attrib-
utable to the charitable contributions to 
which such rule applies which is not al-
lowed as a deduction for the contribution 
year by reason of subsection (b)(1)(I).
426 
† HR 1 EAS 
‘‘(ii) CARRYOVER RULE.—For purposes 
of this subparagraph, the term ‘carryover 
rule’ means— 
‘‘(I) subparagraph (A) of this 
paragraph, 
‘‘(II) 
subparagraphs 
(C)(ii), 
(D)(ii), (E)(ii), and (G)(ii) of sub-
section (b)(1), and 
‘‘(III) the second sentence of sub-
section (b)(1)(B). 
‘‘(iii) 
APPLICABLE
CARRYOVER 
RULE.—For purposes of this subparagraph, 
the term ‘applicable carryover rule’ means 
any carryover rule applicable to charitable 
contributions which were (in whole or in 
part) not allowed as a deduction for the 
contribution year by reason of subsection 
(b)(1)(I).’’. 
(3) COORDINATION WITH DEDUCTION FOR NON-
ITEMIZERS.—Section 170(p), as amended by this Act, 
is further amended by inserting ‘‘, (b)(1)(I),’’ after 
‘‘subsections (b)(1)(G)(ii)’’. 
(b) MODIFICATION OF LIMITATION FOR CASH CON-
TRIBUTIONS.—
427 
† HR 1 EAS 
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
170(b)(1)(G) is amended to read as follows: 
‘‘(i) IN GENERAL.—For taxable years 
beginning after December 31, 2017, any 
contribution of cash to an organization de-
scribed in subparagraph (A) shall be al-
lowed as a deduction under subsection (a) 
to the extent that the aggregate of such con-
tributions does not exceed the excess of— 
‘‘(I) 60 percent of the taxpayer’s 
contribution base for the taxable year, 
over 
‘‘(II) the aggregate amount of con-
tributions taken into account under 
subparagraph (A) for such taxable 
year.’’. 
(2) COORDINATION WITH OTHER LIMITATIONS.— 
(A) IN GENERAL.—Clause (iii) of section 
170(b)(1)(G) is amended— 
(i) by striking ‘‘SUBPARAGRAPHS
(A) 
AND
(B)’’ in the heading and inserting 
‘‘SUBPARAGRAPH (A)’’, and 
(ii) in subclause (II), by striking ‘‘, 
and subparagraph (B)’’ and all that follows 
through ‘‘this subparagraph’’.
428 
† HR 1 EAS 
(B) 
OTHER
CONTRIBUTIONS.—Subpara-
graph (B) of section 170(b)(1) is amended— 
(i) by striking ‘‘to which subparagraph 
(A)’’ both places it appears and inserting 
‘‘to which subparagraph (A) or (G)’’, and 
(ii) in clause (ii), by striking ‘‘over the 
amount’’ and all that follows through ‘‘sub-
paragraph (C)).’’ and inserting ‘‘over— 
‘‘(I) the amount of charitable con-
tributions allowable under subpara-
graph (A) (determined without regard 
to subparagraph (C)) and subpara-
graph (G), reduced by 
‘‘(II) so much of the contributions 
taken into account under subpara-
graph (G) as does not exceed 10 per-
cent of the taxpayer’s contribution 
base.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025.
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† HR 1 EAS 
SEC. 70426. 1-PERCENT FLOOR ON DEDUCTION OF CHARI-
TABLE CONTRIBUTIONS MADE BY CORPORA-
TIONS. 
(a) IN GENERAL.—Section 170(b)(2)(A) is amended to 
read as follows: 
‘‘(A) IN
GENERAL.—Any charitable con-
tribution otherwise allowable (without regard to 
this subparagraph) as a deduction under this 
section for any taxable year, other than any con-
tribution to which subparagraph (B) or (C) ap-
plies, shall be allowed only to the extent that the 
aggregate of such contributions— 
‘‘(i) exceeds 1 percent of the taxpayer’s 
taxable income for the taxable year, and 
‘‘(ii) does not exceed 10 percent of the 
taxpayer’s taxable income for the taxable 
year.’’. 
(b) 
APPLICATION
OF
CARRYFORWARD.—Section 
170(d)(2) is amended to read as follows: 
‘‘(2) CORPORATIONS.— 
‘‘(A) IN
GENERAL.—Any charitable con-
tribution taken into account under subsection 
(b)(2)(A) for any taxable year which is not al-
lowed as a deduction by reason of clause (ii) 
thereof shall be taken into account as a chari-
table contribution for the succeeding taxable
431 
† HR 1 EAS 
‘‘(D) SPECIAL RULE FOR NET OPERATING 
LOSS CARRYOVERS.—The amount of charitable 
contributions carried forward under subpara-
graph (A) shall be reduced to the extent that such 
carryfoward would (but for this subparagraph) 
reduce taxable income (as computed for purposes 
of the second sentence of section 172(b)(2)) and 
increase a net operating loss carryover under 
section 172 to a succeeding taxable year.’’. 
(c) 
CONFORMING
AMENDMENTS.—Subparagraphs 
(B)(ii) and (C)(ii) of section 170(b)(2) are each amended 
by inserting ‘‘other than subparagraph (C) thereof’’ after 
‘‘subsection (d)(2)’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70427. PERMANENT INCREASE IN LIMITATION ON 
COVER OVER OF TAX ON DISTILLED SPIRITS. 
(a) IN GENERAL.—Paragraph (1) of section 7652(f) is 
amended to read as follows: 
‘‘(1) $13.25, or’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to distilled spirits brought into the 
United States after December 31, 2025.
432 
† HR 1 EAS 
SEC. 70428. NONPROFIT COMMUNITY DEVELOPMENT AC-
TIVITIES IN REMOTE NATIVE VILLAGES. 
(a) IN GENERAL.—For purposes of subchapter F of 
chapter 1 of the Internal Revenue Code of 1986, any activ-
ity substantially related to participation or investment in 
fisheries in the Bering Sea and Aleutian Islands statistical 
and reporting areas (as described in Figure 1 of section 
679 of title 50, Code of Federal Regulations) carried on by 
an entity identified in section 305(i)(1)(D) of the Magnu-
son-Stevens Fishery Conservation and Management Act (16 
U.S.C. 1855(i)(1)(D)) (as in effect on the date of enactment 
of this section) shall be considered substantially related to 
the exercise or performance of the purpose constituting the 
basis of such entity’s exemption under section 501(a) of such 
Code if the conduct of such activity is in furtherance of 1 
or more of the purposes specified in section 305(i)(1)(A) of 
such Act (as so in effect). For purposes of this paragraph, 
activities substantially related to participation or invest-
ment in fisheries include the harvesting, processing, trans-
portation, sales, and marketing of fish and fish products 
of the Bering Sea and Aleutian Islands statistical and re-
porting areas. 
(b) APPLICATION TO CERTAIN WHOLLY OWNED SUB-
SIDIARIES.—If the assets of a trade or business relating to 
an activity described in subsection (a) of any subsidiary 
wholly owned by an entity identified in section
433 
† HR 1 EAS 
305(i)(1)(D) of the Magnuson-Stevens Fishery Conservation 
and Management Act (16 U.S.C. 1855(i)(1)(D)) (as in ef-
fect on the date of enactment of this section) are transferred 
to such entity (including in liquidation of such subsidiary) 
not later than 18 months after the date of the enactment 
of this Act— 
(1) no gain or income resulting from such trans-
fer shall be recognized to either such subsidiary or 
such entity under such Code, and 
(2) all income derived from such subsidiary from 
such transferred trade or business shall be exempt 
from taxation under such Code. 
(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act and shall remain 
effective during the existence of the western Alaska commu-
nity development quota program established by Section 
305(i)(1) of the Magnuson-Stevens Fishery Conservation 
and Management Act (16 U.S.C. 1855(i)(1)), as amended. 
SEC. 70429. ADJUSTMENT OF CHARITABLE DEDUCTION FOR 
CERTAIN EXPENSES INCURRED IN SUPPORT 
OF NATIVE ALASKAN SUBSISTENCE WHALING. 
(a) IN GENERAL.—Section 170(n)(1) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘$10,000’’ 
and inserting ‘‘$50,000’’.
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† HR 1 EAS 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70430. EXCEPTION TO PERCENTAGE OF COMPLETION 
METHOD OF ACCOUNTING FOR CERTAIN RES-
IDENTIAL CONSTRUCTION CONTRACTS. 
(a) IN GENERAL.—Section 460(e) is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘home construction con-
tract’’ both places it appears and inserting ‘‘resi-
dential construction contract’’, and 
(B) by inserting ‘‘(determined by sub-
stituting ‘3-year’ for ‘2-year’ in subparagraph 
(B)(i) for any residential construction contract 
which is not a home construction contract)’’ after 
‘‘the requirements of clauses (i) and (ii) of sub-
paragraph (B)’’, 
(2) by striking paragraph (4) and redesignating 
paragraph (5) as paragraph (4), and 
(3) in subparagraph (A) of paragraph (4), as so 
redesignated, by striking ‘‘paragraph (4)’’ and insert-
ing ‘‘paragraph (3)’’. 
(b) APPLICATION OF EXCEPTION FOR PURPOSES OF 
ALTERNATIVE MINIMUM TAX.—Section 56(a)(3) is amend-
ed by striking ‘‘any home construction contract (as defined
435 
† HR 1 EAS 
in section 460(e)(6))’’ and inserting ‘‘any residential con-
struction contract (as defined in section 460(e)(4))’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to contracts entered into in taxable years 
beginning after the date of the enactment of this Act. 
Subchapter D—Permanent Investments in 
Small Business and Rural America 
SEC. 70431. EXPANSION OF QUALIFIED SMALL BUSINESS 
STOCK GAIN EXCLUSION. 
(a) PHASED INCREASE IN EXCLUSION FOR GAIN FROM 
QUALIFIED SMALL BUSINESS STOCK.— 
(1) IN GENERAL.—Section 1202(a)(1) is amend-
ed to read as follows: 
‘‘(1) IN GENERAL.— In the case of a taxpayer 
other than a corporation, gross income shall not in-
clude— 
‘‘(A) except as provided in paragraphs (3) 
and (4), 50 percent of any gain from the sale or 
exchange of qualified small business stock ac-
quired on or before the applicable date and held 
for more than 5 years, and 
‘‘(B) the applicable percentage of any gain 
from the sale or exchange of qualified small busi-
ness stock acquired after the applicable date and 
held for at least 3 years.’’.
436 
† HR 1 EAS 
(2) APPLICABLE PERCENTAGE.—Section 1202(a) 
is amended by adding at the end the following new 
paragraph: 
‘‘(5) APPLICABLE PERCENTAGE.—The applicable 
percentage under paragraph (1) shall be determined 
under the following table: 
‘‘Years stock held: 
Applicable 
percentage: 
3 years ...............................................................................................
50%
4 years ...............................................................................................
75%
5 years or more .................................................................................
100%’’. 
(3) APPLICABLE DATE; ACQUISITION DATE.—Sec-
tion 1202(a), as amended by paragraph (2), is 
amended by adding at the end the following new 
paragraph: 
‘‘(6) APPLICABLE
DATE; ACQUISITION
DATE.— 
For purposes of this section— 
‘‘(A) APPLICABLE DATE.—The term ‘appli-
cable date’ means the date of the enactment of 
this paragraph. 
‘‘(B) ACQUISITION
DATE.—In the case of 
any stock which would (but for this paragraph) 
be treated as having been acquired before, on, or 
after the applicable date, whichever is applicable, 
the acquisition date for purposes of this section 
shall be the first day on which such stock was
437 
† HR 1 EAS 
held by the taxpayer determined after the appli-
cation of section 1223.’’. 
(4) CONTINUED TREATMENT AS NOT ITEM OF 
TAX PREFERENCE.— 
(A) IN
GENERAL.—Section 57(a)(7) is 
amended by striking ‘‘An amount’’ and inserting 
‘‘In the case of stock acquired on or before the 
date of the enactment of the Creating Small 
Business Jobs Act of 2010, an amount’’. 
(B) 
CONFORMING
AMENDMENT.—Section 
1202(a)(4) is amended— 
(i) by striking ‘‘, and’’ at the end of 
subparagraph (B) and inserting a period, 
and 
(ii) by striking subparagraph (C). 
(5) OTHER CONFORMING AMENDMENTS.— 
(A) Paragraphs (3)(A) and (4)(A) of section 
1202(a) are each amended by striking ‘‘para-
graph (1)’’ and inserting ‘‘paragraph (1)(A)’’. 
(B) Paragraph (4)(A) of section 1202(a) is 
amended by inserting ‘‘and on or before the ap-
plicable date’’ after ‘‘2010’’. 
(C) Sections 1202(b)(2), 1202(g)(2)(A), and 
1202(j)(1)(A) are each amended by striking 
‘‘more than 5 years’’ and inserting ‘‘at least 3
438 
† HR 1 EAS 
years (more than 5 years in the case of stock ac-
quired on or before the applicable date)’’. 
(6) EFFECTIVE DATES.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by this 
subsection shall apply to taxable years beginning 
after the date of the enactment of this Act. 
(B) CONTINUED TREATMENT AS NOT ITEM 
OF TAX PREFERENCE.—The amendments made 
by paragraph (4) shall take effect as if included 
in the enactment of section 2011 of the Creating 
Small Business Jobs Act of 2010. 
(b) INCREASE IN PER ISSUER LIMITATION.— 
(1) IN GENERAL.—Subparagraph (A) of section 
1202(b)(1) is amended to read as follows: 
‘‘(A) the applicable dollar limit for the tax-
able year, or’’. 
(2) APPLICABLE DOLLAR LIMIT.—Section 1202 
(b) is amended by adding at the end the following: 
‘‘(4) APPLICABLE DOLLAR LIMIT.—For purposes 
of paragraph (1)(A), the applicable dollar limit for 
any taxable year with respect to eligible gain from 1 
or more dispositions by a taxpayer of qualified busi-
ness stock of a corporation is—
439 
† HR 1 EAS 
‘‘(A) if such stock was acquired by the tax-
payer 
on 
or 
before 
the 
applicable 
date, 
$10,000,000, reduced by the aggregate amount of 
eligible gain taken into account by the taxpayer 
under subsection (a) for prior taxable years and 
attributable to dispositions of stock issued by 
such corporation and acquired by the taxpayer 
before, on, or after the applicable date, and 
‘‘(B) if such stock was acquired by the tax-
payer after the applicable date, $15,000,000, re-
duced by the sum of— 
‘‘(i) the aggregate amount of eligible 
gain taken into account by the taxpayer 
under subsection (a) for prior taxable years 
and attributable to dispositions of stock 
issued by such corporation and acquired by 
the taxpayer before, on, or after the applica-
ble date, plus 
‘‘(ii) the aggregate amount of eligible 
gain taken into account by the taxpayer 
under subsection (a) for the taxable year 
and attributable to dispositions of stock 
issued by such corporation and acquired by 
the taxpayer on or before the applicable 
date.
440 
† HR 1 EAS 
‘‘(5) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of any tax-
able year beginning after 2026, the $15,000,000 
amount in paragraph (4)(B) shall be increased 
by an amount equal to — 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2025’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
If any increase under this subparagraph is not 
a multiple of $10,000, such increase shall be 
rounded to the nearest multiple of $10,000. 
‘‘(B) 
NO
INCREASE
ONCE
LIMIT 
REACHED.—If, for any taxable year, the eligible 
gain attributable to dispositions of stock issued 
by a corporation and acquired by the taxpayer 
after the applicable date exceeds the applicable 
dollar limit, then notwithstanding any increase 
under subparagraph (A) for any subsequent tax-
able year, the applicable dollar limit for such 
subsequent taxable year shall be zero.’’.
441 
† HR 1 EAS 
(3) SEPARATE RETURNS.—Subparagraph (A) of 
section 1202(b)(3) is amended to read as follows: 
‘‘(A) SEPARATE RETURNS.—In the case of a 
separate return by a married individual for any 
taxable year— 
‘‘(i) paragraph (4)(A) shall be applied 
by 
substituting 
‘$5,000,000’ 
for 
‘$10,000,000’, and 
‘‘(ii) paragraph (4)(B) shall be applied 
by substituting one-half of the dollar 
amount in effect under such paragraph for 
the taxable year for the amount so in ef-
fect.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act. 
(c) INCREASE IN LIMIT IN AGGREGATE GROSS AS-
SETS.— 
(1) IN GENERAL.—Subparagraphs (A) and (B) 
of section 1202(d)(1) are each amended by striking 
‘‘$50,000,000’’ and inserting ‘‘$75,000,000’’. 
(2) INFLATION ADJUSTMENT.—Section 1202(b) is 
amended by adding at the end the following: 
‘‘(4) INFLATION
ADJUSTMENT.—In the case of 
any 
taxable 
year 
beginning 
after 
2026, 
the
442 
† HR 1 EAS 
$75,000,000 amounts in paragraphs (1)(A) and 
(1)(B) shall each be increased by an amount equal 
to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year 
in which the taxable year begins, determined by 
substituting ‘calendar year 2025’ for ‘calendar 
year 2016’ in subparagraph (A)(ii) thereof. 
If any increase under this paragraph is not a mul-
tiple of $10,000, such increase shall be rounded to the 
nearest multiple of $10,000.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to stock issued after the 
date of the enactment of this Act. 
SEC. 70432. REPEAL OF REVISION TO DE MINIMIS RULES 
FOR THIRD PARTY NETWORK TRANSACTIONS. 
(a) REINSTATEMENT OF EXCEPTION FOR DE MINIMIS 
PAYMENTS AS IN EFFECT PRIOR TO ENACTMENT OF AMER-
ICAN RESCUE PLAN ACT OF 2021.— 
(1) IN GENERAL.—Section 6050W(e) is amended 
to read as follows: 
‘‘(e) EXCEPTION
FOR DE MINIMIS PAYMENTS
BY 
THIRD PARTY SETTLEMENT ORGANIZATIONS.—A third 
party settlement organization shall be required to report
443 
† HR 1 EAS 
any information under subsection (a) with respect to third 
party network transactions of any participating payee only 
if— 
‘‘(1) the amount which would otherwise be re-
ported under subsection (a)(2) with respect to such 
transactions exceeds $20,000, and 
‘‘(2) the aggregate number of such transactions 
exceeds 200.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall take effect as if included in sec-
tion 9674 of the American Rescue Plan Act. 
(b) APPLICATION OF DE MINIMIS RULE FOR THIRD 
PARTY
NETWORK
TRANSACTIONS
TO
BACKUP
WITH-
HOLDING.— 
(1) IN GENERAL.—Section 3406(b) is amended 
by adding at the end the following new paragraph: 
‘‘(8) OTHER
REPORTABLE
PAYMENTS
INCLUDE 
PAYMENTS IN SETTLEMENT OF THIRD PARTY NET-
WORK
TRANSACTIONS
ONLY
WHERE
AGGREGATE 
TRANSACTIONS EXCEED REPORTING THRESHOLD FOR 
THE CALENDAR YEAR.— 
‘‘(A) IN GENERAL.—Any payment in settle-
ment of a third party network transaction re-
quired to be shown on a return required under 
section 6050W which is made during any cal-
444 
† HR 1 EAS 
endar year shall be treated as a reportable pay-
ment only if— 
‘‘(i) the aggregate number of trans-
actions with respect to the participating 
payee during such calendar year exceeds the 
number of transactions specified in section 
6050W(e)(2), and 
‘‘(ii) the aggregate amount of trans-
actions with respect to the participating 
payee during such calendar year exceeds the 
dollar 
amount 
specified 
in 
section 
6050W(e)(1) at the time of such payment. 
‘‘(B) EXCEPTION IF THIRD PARTY NETWORK 
TRANSACTIONS MADE IN PRIOR YEAR WERE RE-
PORTABLE.—Subparagraph (A) shall not apply 
with respect to payments to any participating 
payee during any calendar year if one or more 
payments in settlement of third party network 
transactions made by the payor to the partici-
pating payee during the preceding calendar year 
were reportable payments.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to calendar years begin-
ning after December 31, 2024.
445 
† HR 1 EAS 
SEC. 70433. INCREASE IN THRESHOLD FOR REQUIRING IN-
FORMATION REPORTING WITH RESPECT TO 
CERTAIN PAYEES. 
(a) IN GENERAL.—Section 6041(a) is amended by 
striking ‘‘$600’’ and inserting ‘‘$2,000’’. 
(b) INFLATION ADJUSTMENT.—Section 6041 is amend-
ed by adding at the end the following new subsection: 
‘‘(h) INFLATION ADJUSTMENT.—In the case of any cal-
endar year after 2026, the dollar amount in subsection (a) 
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 such calendar year, deter-
mined by substituting ‘calendar year 2025’ for ‘cal-
endar year 2016’ in subparagraph (A)(ii) thereof. 
If any increase under the preceding sentence is not a mul-
tiple of $100, such increase shall be rounded to the nearest 
multiple of $100.’’. 
(c) APPLICATION TO REPORTING ON REMUNERATION 
FOR SERVICES.—Section 6041A(a)(2) is amended by strik-
ing ‘‘is $600 or more’’ and inserting ‘‘equals or exceeds the 
dollar amount in effect for such calendar year under section 
6041(a)’’. 
(d) APPLICATION TO BACKUP WITHHOLDING.—Sec-
tion 3406(b)(6) is amended—
446 
† HR 1 EAS 
(1) by striking ‘‘$600’’ in subparagraph (A) and 
inserting ‘‘the dollar amount in effect for such cal-
endar year under section 6041(a)’’, and 
(2) by striking ‘‘ONLY WHERE AGGREGATE FOR 
CALENDAR YEAR IS $600 OR MORE’’ in the heading 
and inserting ‘‘ONLY
WHERE
IN
EXCESS
OF 
THRESHOLD’’. 
(e) CONFORMING AMENDMENTS.— 
(1) The heading of section 6041(a) is amended 
by striking ‘‘OF $600 OR MORE’’ and inserting ‘‘EX-
CEEDING THRESHOLD’’. 
(2) Section 6041(a) is amended by striking ‘‘tax-
able year’’ and inserting ‘‘calendar year’’. 
(f) EFFECTIVE DATE.—The amendments made by this 
section shall apply with respect to payments made after De-
cember 31, 2025. 
SEC. 70434. TREATMENT OF CERTAIN QUALIFIED SOUND 
RECORDING PRODUCTIONS. 
(a) ELECTION TO TREAT COSTS AS EXPENSES.—Sec-
tion 181(a)(1) is amended by striking ‘‘qualified film or 
television production, and any qualified live theatrical pro-
duction,’’ and inserting ‘‘qualified film or television pro-
duction, any qualified live theatrical production, and any 
qualified sound recording production’’.
447 
† HR 1 EAS 
(b) DOLLAR
LIMITATION.—Section 181(a)(2) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) QUALIFIED
SOUND
RECORDING
PRO-
DUCTION.—Paragraph (1) shall not apply to so 
much of the aggregate cost of any qualified sound 
recording production, or to so much of the aggre-
gate, cumulative cost of all such qualified sound 
recording productions in the taxable year, as ex-
ceeds $150,000.’’. 
(c) NO OTHER DEDUCTION OR AMORTIZATION DEDUC-
TION ALLOWABLE.—Section 181(b) is amended by striking 
‘‘qualified film or television production or any qualified 
live theatrical production’’ and inserting ‘‘qualified film or 
television production, any qualified live theatrical produc-
tion, or any qualified sound recording production’’. 
(d) ELECTION.—Section 181(c)(1) is amended by 
striking ‘‘qualified film or television production or any 
qualified live theatrical production’’ and inserting ‘‘quali-
fied film or television production, any qualified live theat-
rical production, or any qualified sound recording produc-
tion’’. 
(e) QUALIFIED SOUND RECORDING PRODUCTION DE-
FINED.—Section 181 is amended by redesignating sub-
sections (f) and (g) as subsections (g) and (h), respectively,
448 
† HR 1 EAS 
and by inserting after subsection (e) the following new sub-
section: 
‘‘(f) QUALIFIED SOUND RECORDING PRODUCTION.— 
For purposes of this section, the term ‘qualified sound re-
cording production’ means a sound recording (as defined 
in section 101 of title 17, United States Code) produced 
and recorded in the United States.’’. 
(f) APPLICATION OF TERMINATION.—Section 181(h), 
as redesignated by subsection (e), is amended by striking 
‘‘qualified film and television productions or qualified live 
theatrical productions’’ and inserting ‘‘qualified film and 
television productions, qualified live theatrical productions, 
or qualified sound recording productions’’. 
(g) BONUS DEPRECIATION.— 
(1) QUALIFIED SOUND RECORDING PRODUCTION 
AS QUALIFIED PROPERTY.—Section 168(k)(2)(A)(i) is 
amended— 
(A) by striking ‘‘or’’ at the end of subclause 
(IV), by inserting ‘‘or’’ at the end of subclause 
(V), and by inserting after subclause (V) the fol-
lowing: 
‘‘(VI) which is a qualified sound 
recording production (as defined in 
subsection (f) of section 181) for which 
a deduction would have been allowable
449 
† HR 1 EAS 
under section 181 without regard to 
subsections (a)(2) and (h) of such sec-
tion or this subsection, and’’, and 
(B) in subclauses (IV) and (V) (as so 
amended) by striking ‘‘without regard to sub-
sections (a)(2) and (g)’’ both places it appears 
and inserting ‘‘without regard to subsections 
(a)(2) and (h)’’. 
(2) PRODUCTION PLACED IN SERVICE.—Section 
168(k)(2)(H) is amended by striking ‘‘and’’ at the 
end of clause (i), by striking the period at the end of 
clause (ii) and inserting ‘‘, and’’, and by adding after 
clause (ii) the following: 
‘‘(iii) a qualified sound recording pro-
duction shall be considered to be placed in 
service at the time of initial release or 
broadcast.’’. 
(h) CONFORMING AMENDMENTS.— 
(1) The heading for section 181 is amended to 
read as follows: ‘‘TREATMENT
OF
CERTAIN 
QUALIFIED PRODUCTIONS.’’. 
(2) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by striking the 
item relating to section 181 and inserting the fol-
lowing new item: 
‘‘Sec. 181. Treatment of certain qualified productions.’’.
450 
† HR 1 EAS 
(i) EFFECTIVE DATE.—The amendments made by this 
section shall apply to productions commencing in taxable 
years ending after the date of the enactment of this Act. 
SEC. 70435. EXCLUSION OF INTEREST ON LOANS SECURED 
BY RURAL OR AGRICULTURAL REAL PROP-
ERTY. 
(a) IN GENERAL.—Part III of subchapter B of chapter 
1, as amended by the preceding provisions of this Act, is 
amended by inserting after section 139K the following new 
section: 
‘‘SEC. 139L. INTEREST ON LOANS SECURED BY RURAL OR 
AGRICULTURAL REAL PROPERTY. 
‘‘(a) IN GENERAL.—Gross income shall not include 25 
percent of the interest received by a qualified lender on any 
qualified real estate loan. 
‘‘(b) QUALIFIED LENDER.—For purposes of this sec-
tion, the term ‘qualified lender’ means— 
‘‘(1) any bank or savings association the deposits 
of which are insured under the Federal Deposit Insur-
ance Act (12 U.S.C. 1811 et seq.), 
‘‘(2) any State- or federally-regulated insurance 
company, 
‘‘(3) any entity wholly owned, directly or indi-
rectly, by a company that is treated as a bank hold-
451 
† HR 1 EAS 
ing company for purposes of section 8 of the Inter-
national Banking Act of 1978 (12 U.S.C. 3106) if— 
‘‘(A) such entity is organized, incorporated, 
or established under the laws of the United 
States or any State, and 
‘‘(B) the principal place of business of such 
entity is in the United States (including any 
territory of the United States), 
‘‘(4) any entity wholly owned, directly or indi-
rectly, by a company that is considered an insurance 
holding company under the laws of any State if such 
entity satisfies the requirements described in subpara-
graphs (A) and (B) of paragraph (3), and 
‘‘(5) with respect to interest received on a quali-
fied real estate loan secured by real estate described 
in subsection (c)(3)(A), any federally chartered in-
strumentality of the United States established under 
section 8.1(a) of the Farm Credit Act of 1971 (12 
U.S.C. 2279aa-1(a)). 
‘‘(c) QUALIFIED REAL ESTATE LOAN.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified real es-
tate loan’ means any loan— 
‘‘(A) secured by—
452 
† HR 1 EAS 
‘‘(i) rural or agricultural real estate, 
or 
‘‘(ii) a leasehold mortgage (with a sta-
tus as a lien) on rural or agricultural real 
estate, 
‘‘(B) made to a person other than a speci-
fied foreign entity (as defined in section 
7701(a)(51)), and 
‘‘(C) made after the date of the enactment 
of this section. 
For purposes of the preceding sentence, the determina-
tion of whether property securing such loan is rural 
or agricultural real estate shall be made as of the time 
the interest income on such loan is accrued. 
‘‘(2) REFINANCINGS.—For purposes of subpara-
graphs (A) and (C) of paragraph (1), a loan shall not 
be treated as made after the date of the enactment of 
this section to the extent that the proceeds of such loan 
are used to refinance a loan which was made on or 
before the date of the enactment of this section (or, in 
the case of any series of refinancings, the original 
loan was made on or before such date). 
‘‘(3) RURAL OR AGRICULTURAL REAL ESTATE.— 
The term ‘rural or agricultural real estate’ means—
453 
† HR 1 EAS 
‘‘(A) any real property which is substan-
tially used for the production of one or more ag-
ricultural products, 
‘‘(B) any real property which is substan-
tially used in the trade or business of fishing or 
seafood processing, and 
‘‘(C) any aquaculture facility. 
Such term shall not include any property which is 
not located in a State or a possession of the United 
States. 
‘‘(4) AQUACULTURE FACILITY.—The term ‘aqua-
culture facility’ means any land, structure, or other 
appurtenance that is used for aquaculture (including 
any hatchery, rearing pond, raceway, pen, or incu-
bator). 
‘‘(d) COORDINATION WITH SECTION 265.—In the case 
of any qualified real estate loan, section 265 shall be ap-
plied— 
‘‘(1) by treating any qualified real estate loan 
for purposes of subsection (a)(2) thereof as an obliga-
tion the interest on which is wholly exempt from the 
taxes imposed by this subtitle, 
‘‘(2) by substituting ‘25 percent of the interest on 
indebtedness’ for ‘Interest on indebtedness’ in such 
subsection (a)(2),
454 
† HR 1 EAS 
‘‘(3) by treating 25 percent of the adjusted basis 
of any qualified real estate loan as adjusted basis of 
a tax-exempt obligation described in subsection 
(b)(4)(B) thereof, and 
‘‘(4) by substituting ‘25 percent of the amount of 
such indebtedness’ for ‘the amount of such indebted-
ness’ in subsection (b)(6)(A)(a)(ii) thereof.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
part III of subchapter B of chapter 1, as amended by the 
preceding provisions of this Act, is amended by inserting 
after the item relating to section 139K the following new 
item: 
‘‘Sec. 139L. Interest on loans secured by rural or agricultural real property.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years ending after the date 
of the enactment of this Act. 
SEC. 70436. REDUCTION OF TRANSFER AND MANUFAC-
TURING TAXES FOR CERTAIN DEVICES. 
(a) TRANSFER TAX.—Section 5811(a) is amended to 
read as follows: 
‘‘(a) RATE.—There shall be levied, collected, and paid 
on firearms transferred a tax at the rate of— 
‘‘(1) $200 for each firearm transferred in the 
case of a machinegun or a destructive device, and 
‘‘(2) $0 for any firearm transferred which is not 
described in paragraph (1).’’.
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† HR 1 EAS 
(b) MAKING TAX.—Section 5821(a) is amended to read 
as follows: 
‘‘(a) RATE.—There shall be levied, collected, and paid 
upon the making of a firearm a tax at the rate of— 
‘‘(1) $200 for each firearm made in the case of 
a machinegun or a destructive device, and 
‘‘(2) $0 for any firearm made which is not de-
scribed in paragraph (1).’’. 
(c) CONFORMING AMENDMENT.—Section 4182(a) is 
amended by adding at the end the following: ‘‘For purposes 
of the preceding sentence, any firearm described in section 
5811(a)(2) shall be deemed to be a firearm on which the 
tax provided by section 5811 has been paid.’’ 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to calendar quarters beginning more 
than 90 days after the date of the enactment of this Act. 
SEC. 70437. TREATMENT OF CAPITAL GAINS FROM THE 
SALE OF CERTAIN FARMLAND PROPERTY. 
(a) IN GENERAL.—Part IV of subchapter O of chapter 
1 is amended by redesignating section 1062 as section 1063 
and by inserting after section 1061 the following new sec-
tion:
456 
† HR 1 EAS 
‘‘SEC. 1062. GAIN FROM THE SALE OR EXCHANGE OF QUALI-
FIED FARMLAND PROPERTY TO QUALIFIED 
FARMERS. 
‘‘(a) ELECTION TO PAY TAX IN INSTALLMENTS.—In 
the case of gain from the sale or exchange of qualified farm-
land property to a qualified farmer, at the election of the 
taxpayer, the portion of the net income tax of such taxpayer 
for the taxable year of the sale or exchange which is equal 
to the applicable net tax liability shall be paid in 4 equal 
installments. 
‘‘(b) RULES
RELATING
TO
INSTALLMENT
PAY-
MENTS.— 
‘‘(1) DATE FOR PAYMENT OF INSTALLMENTS.—If 
an election is made under subsection (a), the first in-
stallment shall be paid on the due date (determined 
without regard to any extension of time for filing the 
return) for the return of tax for the taxable year in 
which the sale or exchange occurs and each succeeding 
installment shall be paid on the due date (as so deter-
mined) for the return of tax for the taxable year fol-
lowing the taxable year with respect to which the pre-
ceding installment was made. 
‘‘(2) ACCELERATION OF PAYMENT.— 
‘‘(A) IN GENERAL.—If there is an addition 
to tax for failure to timely pay any installment 
required under this section, then the unpaid por-
457 
† HR 1 EAS 
tion of all remaining installments shall be due 
on the date of such failure. 
‘‘(B) INDIVIDUALS.—In the case of an indi-
vidual, if the individual dies, then the unpaid 
portion of all remaining installment shall be 
paid on the due date for the return of tax for the 
taxable year in which the taxpayer dies. 
‘‘(C) C CORPORATIONS.—In the case of a 
taxpayer which is a C corporation, trust, or es-
tate, if there is a liquidation or sale of substan-
tially all the assets of the taxpayer (including in 
a title 11 or similar case), a cessation of business 
by the taxpayer (in the case of a C corporation), 
or any similar circumstance, then the unpaid 
portion of all remaining installments shall be 
due on the date of such event (or in the case of 
a title 11 or similar case, the day before the peti-
tion is filed). The preceding sentence shall not 
apply to the sale of substantially all the assets of 
a taxpayer to a buyer if such buyer enters into 
an agreement with the Secretary under which 
such buyer is liable for the remaining install-
ments due under this subsection in the same 
manner as if such buyer were the taxpayer.
458 
† HR 1 EAS 
‘‘(3) PRORATION
OF
DEFICIENCY
TO
INSTALL-
MENTS.—If an election is made under subsection (a) 
to pay the applicable net tax liability in installments 
and a deficiency has been assessed with respect to 
such applicable net tax liability, the deficiency shall 
be prorated to the installments payable under sub-
section (a). The part of the deficiency so prorated to 
any installment the date for payment of which has 
not arrived shall be collected at the same time as, and 
as a part of, such installment. The part of the defi-
ciency so prorated to any installment the date for 
payment of which has arrived shall be paid upon no-
tice and demand from the Secretary. This section 
shall not apply if the deficiency is due to negligence, 
to intentional disregard of rules and regulations, or 
to fraud with intent to evade tax. 
‘‘(c) ELECTION.— 
‘‘(1) IN
GENERAL.—Any election under sub-
section (a) shall be made not later than the due date 
for the return of tax for the taxable year described in 
subsection (a). 
‘‘(2) PARTNERSHIPS AND S CORPORATIONS.—In 
the case of a sale or exchange described in subsection 
(a) by a partnership or S corporation, the election 
under subsection (a) shall be made at the partner or
459 
† HR 1 EAS 
shareholder level. The Secretary may prescribe such 
regulations or other guidance as necessary to carry 
out the purposes of this paragraph. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) APPLICABLE NET TAX LIABILITY.— 
‘‘(A) IN GENERAL.—The applicable net tax 
liability with respect to the sale or exchange of 
any property described in subsection (a) is the 
excess (if any) of— 
‘‘(i) such taxpayer’s net income tax for 
the taxable year, over 
‘‘(ii) such taxpayer’s net income tax 
for such taxable year determined without re-
gard to any gain recognized from the sale or 
exchange of such property. 
‘‘(B) NET INCOME TAX.—The term ‘net in-
come tax’ means the regular tax liability reduced 
by the credits allowed under subparts A, B, and 
D of part IV of subchapter A. 
‘‘(2) QUALIFIED FARMLAND PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
farmland property’ means real property located 
in the United States— 
‘‘(i) which—
460 
† HR 1 EAS 
‘‘(I) has been used by the taxpayer 
as a farm for farming purposes, or 
‘‘(II) leased by the taxpayer to a 
qualified farmer for farming purposes, 
during substantially all of the 10-year pe-
riod ending on the date of the qualified sale 
or exchange, and 
‘‘(ii) which is subject to a covenant or 
other legally enforceable restriction which 
prohibits the use of such property other 
than as a farm for farming purposes for 
any period before the date that is 10 years 
after the date of the sale or exchange de-
scribed in subsection (a). 
For purposes of clause (i), property which is 
used or leased by a partnership or S corporation 
in a manner described in such clause shall be 
treated as used or leased in such manner by each 
person who holds a direct or indirect interest in 
such partnership or S corporation. 
‘‘(B) 
FARM; 
FARMING
PURPOSES.—The 
terms ‘farm’ and ‘farming purposes’ have the re-
spective meanings given such terms under section 
2032A(e).
461 
† HR 1 EAS 
‘‘(3) QUALIFIED FARMER.—The term ‘qualified 
farmer’ means any individual who is actively en-
gaged in farming (within the meaning of subsections 
(b) and (c) of section 1001 of the Food Security Act 
of 1986 (7 U.S.C. 1308–1(b) and (c))). 
‘‘(e) RETURN REQUIREMENT.—A taxpayer making an 
election under subsection (a) shall include with the return 
for the taxable year of the sale or exchange described in sub-
section (a) a copy of the covenant or other legally enforce-
able restriction described in subsection (d)(2)(A)(ii).’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
part IV of subchapter O of chapter 1 is amended by redesig-
nating the item relating to section 1062 as relating to sec-
tion 1063 and by inserting after the item relating to section 
1061 the following new item: 
‘‘Sec. 1062. Gain from the sale or exchange of qualified farmland property to 
qualified farmers.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to sales or exchanges in taxable years 
beginning after the date of the enactment of this Act. 
SEC. 70438. EXTENSION OF RULES FOR TREATMENT OF 
CERTAIN DISASTER-RELATED PERSONAL CAS-
UALTY LOSSES. 
For purposes of applying section 304(b) of the Tax-
payer Certainty and Disaster Tax Relief Act of 2020 (divi-
sion EE of Public Law 116–260), section 301 of such Act
462 
† HR 1 EAS 
shall be applied by substituting the date of the enactment 
of this section for ‘‘the date of the enactment of this Act’’ 
each place it appears. 
SEC. 70439. RESTORATION OF TAXABLE REIT SUBSIDIARY 
ASSET TEST. 
(a) IN GENERAL.—Section 856(c)(4)(B)(ii) is amend-
ed by striking ‘‘20 percent’’ and inserting ‘‘25 percent’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
CHAPTER 5—ENDING GREEN NEW DEAL 
SPENDING, 
PROMOTING 
AMERICA- 
FIRST ENERGY, AND OTHER REFORMS 
Subchapter A—Termination of Green New 
Deal Subsidies 
SEC. 70501. TERMINATION OF PREVIOUSLY-OWNED CLEAN 
VEHICLE CREDIT. 
Section 25E(g) is amended by striking ‘‘December 31, 
2032’’ and inserting ‘‘September 30, 2025’’. 
SEC. 70502. TERMINATION OF CLEAN VEHICLE CREDIT. 
(a) IN GENERAL.—Section 30D(h) is amended by 
striking ‘‘placed in service after December 31, 2032’’ and 
inserting ‘‘acquired after September 30, 2025’’. 
(b) CONFORMING AMENDMENTS.—Section 30D(e) is 
amended—
463 
† HR 1 EAS 
(1) in paragraph (1)(B)— 
(A) in clause (iii), by inserting ‘‘and’’ after 
the comma at the end, 
(B) in clause (iv), by striking ‘‘, and’’ and 
inserting a period, and 
(C) by striking clause (v), and 
(2) in paragraph (2)(B)— 
(A) in clause (ii), by inserting ‘‘and’’ after 
the comma at the end, 
(B) in clause (iii), by striking the comma 
at the end and inserting a period, and 
(C) by striking clauses (iv) through (vi). 
SEC. 70503. TERMINATION OF QUALIFIED COMMERCIAL 
CLEAN VEHICLES CREDIT. 
Section 45W(g) is amended by striking ‘‘December 31, 
2032’’ and inserting ‘‘September 30, 2025’’. 
SEC. 70504. TERMINATION OF ALTERNATIVE FUEL VEHICLE 
REFUELING PROPERTY CREDIT. 
Section 30C(i) is amended by striking ‘‘December 31, 
2032’’ and inserting ‘‘June 30, 2026’’. 
SEC. 70505. TERMINATION OF ENERGY EFFICIENT HOME IM-
PROVEMENT CREDIT. 
(a) IN GENERAL.—Section 25C(h) is amended by 
striking ‘‘placed in service’’ and all that follows through
465 
† HR 1 EAS 
(3) by striking paragraphs (4) and (5). 
SEC. 70507. TERMINATION OF ENERGY EFFICIENT COMMER-
CIAL BUILDINGS DEDUCTION. 
Section 179D is amended by adding at the end the 
following new subsection: 
‘‘(i) TERMINATION.—This section shall not apply with 
respect to property the construction of which begins after 
June 30, 2026.’’. 
SEC. 70508. TERMINATION OF NEW ENERGY EFFICIENT 
HOME CREDIT. 
Section 45L(h) is amended by striking ‘‘December 31, 
2032’’ and inserting ‘‘June 30, 2026’’. 
SEC. 70509. TERMINATION OF COST RECOVERY FOR EN-
ERGY PROPERTY. 
(a) ENERGY PROPERTY.—Section 168(e)(3)(B)(vi), as 
amended by section 13703 of Public Law 117–169, is 
amended— 
(1) by striking subclause (I), and 
(2) by redesignating subclauses (II) and (III) as 
subclauses (I) and (II), respectively. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to property the construction of which 
begins after December 31, 2024.
466 
† HR 1 EAS 
SEC. 70510. MODIFICATIONS OF ZERO-EMISSION NUCLEAR 
POWER PRODUCTION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45U(c) is amended by adding at 
the end the following new paragraph: 
‘‘(3) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit shall be deter-
mined under subsection (a) for any taxable year 
beginning after the date of enactment of this 
paragraph if the taxpayer is a specified foreign 
entity (as defined in section 7701(a)(51)(B)). 
‘‘(B) OTHER
PROHIBITED
FOREIGN
ENTI-
TIES.—No credit shall be determined under sub-
section (a) for any taxable year beginning after 
the date which is 2 years after the date of enact-
ment of this paragraph if the taxpayer is a for-
eign-influenced entity (as defined in section 
7701(a)(51)(D), without regard to clause (i)(II) 
thereof).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after the date 
of enactment of this Act.
467 
† HR 1 EAS 
SEC. 70511. TERMINATION OF CLEAN HYDROGEN PRODUC-
TION CREDIT. 
Section 45V(c)(3)(C) is amended by striking ‘‘January 
1, 2033’’ and inserting ‘‘January 1, 2028’’. 
SEC. 70512. TERMINATION AND RESTRICTIONS ON CLEAN 
ELECTRICITY PRODUCTION CREDIT. 
(a) TERMINATION
FOR WIND
AND SOLAR FACILI-
TIES.—Section 45Y(d) is amended— 
(1) in paragraph (1), by striking ‘‘The amount 
of’’ and inserting ‘‘Subject to paragraph (4), the 
amount of’’, and 
(2) by striking paragraph (3) and inserting the 
following new paragraphs: 
‘‘(3) APPLICABLE YEAR.—For purposes of this 
subsection, the term ‘applicable year’ means calendar 
year 2032. 
‘‘(4) TERMINATION FOR WIND AND SOLAR FACILI-
TIES.— 
‘‘(A) IN GENERAL.—This section shall not 
apply with respect to any applicable facility 
placed in service after December 31, 2027. 
‘‘(B) APPLICABLE FACILITY.—For purposes 
of this paragraph, the term ‘applicable facility’ 
means a qualified facility which— 
‘‘(i) uses wind to produce electricity 
(within the meaning of such term as used
468 
† HR 1 EAS 
in section 45(d)(1), as determined without 
regard to any requirement under such sec-
tion with respect to the date on which con-
struction of property begins), or 
‘‘(ii) uses solar energy to produce elec-
tricity (within the meaning of such term as 
used in section 45(d)(4), as determined 
without regard to any requirement under 
such section with respect to the date on 
which construction of property begins).’’. 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Y is amended— 
(1) in subsection (b)(1), by adding at the end the 
following new subparagraph: 
‘‘(E) MATERIAL ASSISTANCE FROM PROHIB-
ITED
FOREIGN
ENTITIES.—The term ‘qualified 
facility’ shall not include any facility for which 
construction begins after December 31, 2025, if 
the construction of such facility includes any 
material assistance from a prohibited foreign en-
tity (as defined in section 7701(a)(52)).’’, and 
(2) in subsection (g), by adding at the end the 
following new paragraph: 
‘‘(13) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—
469 
† HR 1 EAS 
‘‘(A) IN GENERAL.—No credit shall be deter-
mined under subsection (a) for any taxable year 
if the taxpayer is— 
‘‘(i) a specified foreign entity (as de-
fined in section 7701(a)(51)(B)), or 
‘‘(ii) a foreign-influenced entity (as de-
fined in section 7701(a)(51)(D), without re-
gard to clause (i)(II) thereof). 
‘‘(B) EFFECTIVE CONTROL.—In the case of 
a 
taxpayer 
for 
which 
section 
7701(a)(51)(D)(i)(II) is determined to apply for 
any taxable year, no credit shall be determined 
under subsection (a) for such taxable year if such 
determination relates to a qualified facility de-
scribed in subsection (b)(1).’’. 
(c) DEFINITIONS RELATING TO PROHIBITED FOREIGN 
ENTITIES.—Section 7701(a) is amended by adding at the 
end the following new paragraphs: 
‘‘(51) PROHIBITED FOREIGN ENTITY.— 
‘‘(A) IN GENERAL.— 
‘‘(i) DEFINITION.—The term ‘prohib-
ited foreign entity’ means a specified for-
eign entity or a foreign-influenced entity. 
‘‘(ii) DETERMINATION.—
470 
† HR 1 EAS 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), for any taxable year, 
the determination as to whether an en-
tity is a specified foreign entity or for-
eign-influenced entity shall be made as 
of the last day of such taxable year. 
‘‘(II) INITIAL
TAXABLE
YEAR.— 
For purposes of the first taxable year 
beginning after the date of enactment 
of this paragraph, the determination as 
to whether an entity is a specified for-
eign entity described in clauses (i) 
through (iv) of subparagraph (B) shall 
be made as of the first day of such tax-
able year. 
‘‘(B) SPECIFIED
FOREIGN
ENTITY.—For 
purposes of this paragraph, the term ‘specified 
foreign entity’ means— 
‘‘(i) a foreign entity of concern de-
scribed in subparagraph (A), (B), (D), or 
(E) of section 9901(8) of the William M. 
(Mac) Thornberry National Defense Author-
ization Act for Fiscal Year 2021 (Public 
Law 116–283; 15 U.S.C. 4651),
471 
† HR 1 EAS 
‘‘(ii) an entity identified as a Chinese 
military company operating in the United 
States in accordance with section 1260H of 
the William M. (Mac) Thornberry National 
Defense Authorization Act for Fiscal Year 
2021 (Public Law 116–283; 10 U.S.C. 113 
note), 
‘‘(iii) an entity included on a list re-
quired by clause (i), (ii), (iv), or (v) of sec-
tion 2(d)(2)(B) of Public Law 117–78 (135 
Stat. 1527), 
‘‘(iv) an entity specified under section 
154(b) of the National Defense Authoriza-
tion Act for Fiscal Year 2024 (Public Law 
118–31; 10 U.S.C. note prec. 4651), or 
‘‘(v) a foreign-controlled entity. 
‘‘(C) FOREIGN-CONTROLLED
ENTITY.—For 
purposes of subparagraph (B), the term ‘foreign- 
controlled entity’ means— 
‘‘(i) the government (including any 
level of government below the national level) 
of a covered nation, 
‘‘(ii) an agency or instrumentality of a 
government described in clause (i),
472 
† HR 1 EAS 
‘‘(iii) a person who is a citizen or na-
tional of a covered nation, provided that 
such person is not an individual who is a 
citizen, national, or lawful permanent resi-
dent of the United States, 
‘‘(iv) an entity or a qualified business 
unit (as defined in section 989(a)) incor-
porated or organized under the laws of, or 
having its principal place of business in, a 
covered nation, or 
‘‘(v) an entity (including subsidiary 
entities) controlled (as determined under 
subparagraph (G)) by an entity described 
in clause (i), (ii), (iii), or (iv). 
‘‘(D) FOREIGN-INFLUENCED ENTITY.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A), the term ‘foreign-influ-
enced entity’ means an entity— 
‘‘(I) with respect to which, during 
the taxable year— 
‘‘(aa) a specified foreign en-
tity has the direct authority to 
appoint a covered officer of such 
entity,
473 
† HR 1 EAS 
‘‘(bb) a single specified for-
eign entity owns at least 25 per-
cent of such entity, 
‘‘(cc) one or more specified 
foreign entities own in the aggre-
gate at least 40 percent of such 
entity, or 
‘‘(dd) at least 15 percent of 
the debt of such entity has been 
issued, in the aggregate, to 1 or 
more specified foreign entities, or 
‘‘(II) which, during the previous 
taxable year, made a payment to a 
specified foreign entity pursuant to a 
contract, agreement, or other arrange-
ment which entitles such specified for-
eign entity (or an entity related to 
such specified foreign entity) to exer-
cise effective control over— 
‘‘(aa) any qualified facility 
or energy storage technology of the 
taxpayer (or any person related to 
the taxpayer), or 
‘‘(bb) with respect to any eli-
gible component produced by the
474 
† HR 1 EAS 
taxpayer (or any person related to 
the taxpayer)— 
‘‘(AA) 
the 
extraction, 
processing, or recycling of 
any applicable critical min-
eral, or 
‘‘(BB) the production of 
an eligible component which 
is not an applicable critical 
mineral. 
‘‘(ii) EFFECTIVE CONTROL.— 
‘‘(I) IN GENERAL.— 
‘‘(aa) GENERAL RULE.—Sub-
ject to subclause (II), for purposes 
of clause (i)(II), the term ‘effective 
control’ means 1 or more agree-
ments or arrangements similar to 
those described in subclauses (II) 
and (III) which provide 1 or more 
contractual counterparties of a 
taxpayer with specific authority 
over key aspects of the production 
of eligible components, energy gen-
eration in a qualified facility, or 
energy storage which are not in-
475 
† HR 1 EAS 
cluded in the measures of control 
through authority, ownership, or 
debt held which are described in 
clause (i)(I). 
‘‘(bb) GUIDANCE.—The Sec-
retary shall issue such guidance 
as is necessary to carry out the 
purposes of this clause, including 
the establishment of rules to pre-
vent entities from evading, cir-
cumventing, or abusing the appli-
cation of the restrictions described 
subparagraph (C) and subclauses 
(II) and (III) of this clause 
through a contract, agreement, or 
other arrangement. 
‘‘(II) APPLICATION
OF
RULES 
PRIOR TO ISSUANCE OF GUIDANCE.— 
During any period prior to the date 
that the guidance described in sub-
clause (I)(bb) is issued by the Sec-
retary, for purposes of clause (i)(II), 
the term ‘effective control’ means the 
unrestricted contractual right of a con-
tractual counterparty to—
476 
† HR 1 EAS 
‘‘(aa) determine the quantity 
or timing of production of an eli-
gible component produced by the 
taxpayer, 
‘‘(bb) determine the amount 
or timing of activities related to 
the production of electricity un-
dertaken at a qualified facility of 
the taxpayer or the storage of elec-
trical energy in energy storage 
technology of the taxpayer, 
‘‘(cc) determine which entity 
may purchase or use the output of 
a production unit of the taxpayer 
that produces eligible components, 
‘‘(dd) determine which entity 
may purchase or use the output of 
a qualified facility of the tax-
payer, 
‘‘(ee) restrict access to data 
critical to production or storage of 
energy undertaken at a qualified 
facility of the taxpayer, or to the 
site of production or any part of 
a qualified facility or energy stor-
477 
† HR 1 EAS 
age technology of the taxpayer, to 
the personnel or agents of such 
contractual counterparty, or 
‘‘(ff) on an exclusive basis, 
maintain, repair, or operate any 
plant or equipment which is nec-
essary to the production by the 
taxpayer of eligible components or 
electricity. 
‘‘(III) LICENSING
AND
OTHER 
AGREEMENTS.— 
‘‘(aa) IN GENERAL.—In ad-
dition to subclause (II), for pur-
poses of clause (i)(II), the term 
‘effective control’ means, with re-
spect to a licensing agreement for 
the provision of intellectual prop-
erty (or any other contract, agree-
ment or other arrangement en-
tered into with a contractual 
counterparty related to such li-
censing agreement) with respect to 
a qualified facility, energy storage 
technology, or the production of
478 
† HR 1 EAS 
an eligible component, any of the 
following: 
‘‘(AA) 
A 
contractual 
right retained by the contrac-
tual counterparty to specify 
or otherwise direct 1 or more 
sources of components, sub-
components, 
or 
applicable 
critical minerals utilized in 
a qualified facility, energy 
storage technology, or in the 
production of an eligible 
component. 
‘‘(BB) 
A 
contractual 
right retained by the contrac-
tual counterparty to direct 
the operation of any quali-
fied facility, any energy stor-
age technology, or any pro-
duction unit that produces 
an eligible component. 
‘‘(CC) 
A 
contractual 
right retained by the contrac-
tual counterparty to limit 
the taxpayer’s utilization of
479 
† HR 1 EAS 
intellectual property related 
to the operation of a quali-
fied facility or energy storage 
technology, or in the produc-
tion of an eligible component. 
‘‘(DD) 
A 
contractual 
right retained by the contrac-
tual counterparty to receive 
royalties under the licensing 
agreement or any similar 
agreement 
(or 
payments 
under any related agreement) 
beyond the 10th year of the 
agreement (including modi-
fications or extensions there-
of). 
‘‘(EE) 
A 
contractual 
right retained by the contrac-
tual counterparty to direct or 
otherwise require the tax-
payer to enter into an agree-
ment for the provision of 
services for a duration longer 
than 2 years (including any
480 
† HR 1 EAS 
modifications or extensions 
thereof). 
‘‘(FF) 
Such 
contract, 
agreement, or other arrange-
ment does not provide the li-
censee with all the technical 
data, 
information, 
and 
know-how necessary to enable 
the licensee to produce the el-
igible component or compo-
nents subject to the contract, 
agreement, or other arrange-
ment without further involve-
ment from the contractual 
counterparty or a specified 
foreign entity. 
‘‘(GG) Such contract, 
agreement, or other arrange-
ment was entered into (or 
modified) on or after the date 
of enactment of this para-
graph. 
‘‘(bb) EXCEPTION.— 
‘‘(AA) IN
GENERAL.— 
Item (aa) shall not apply in
481 
† HR 1 EAS 
the case of a bona fide pur-
chase or sale of intellectual 
property. 
‘‘(BB) BONA FIDE PUR-
CHASE OR SALE.—For pur-
poses of item (aa), any pur-
chase or sale of intellectual 
property where the agreement 
provides that ownership of 
the intellectual property re-
verts 
to 
the 
contractual 
counterparty after a period 
of time shall not be consid-
ered a bona-fide purchase or 
sale. 
‘‘(IV) PERSONS RELATED TO THE 
TAXPAYER.—For purposes of subclauses 
(I), (II), and (III), the term ‘taxpayer’ 
shall include any person related to the 
taxpayer. 
‘‘(V) 
CONTRACTUAL 
COUNTERPARTY.—For purposes of this 
clause, 
the 
term 
‘contractual 
counterparty’ means an entity with 
which the taxpayer has entered into a
482 
† HR 1 EAS 
contract, agreement, or other arrange-
ment. 
‘‘(iii) GUIDANCE.—Not later than De-
cember 31, 2026, the Secretary shall issue 
such guidance as is necessary to carry out 
the purposes of this subparagraph, includ-
ing establishment of rules to prevent entities 
from evading, circumventing, or abusing the 
application of the restrictions against im-
permissible technology licensing arrange-
ments with specified foreign entities, such 
as through temporary transfers of intellec-
tual property, retention by a specified for-
eign entity of a reversionary interest in 
transferred intellectual property, or other-
wise. 
‘‘(E) PUBLICLY TRADED ENTITIES.— 
‘‘(i) IN GENERAL.— 
‘‘(I) NONAPPLICATION OF CERTAIN 
FOREIGN-CONTROLLED
ENTITY 
RULES.—Subparagraph (C)(v) shall 
not apply in the case of any entity the 
securities of which are regularly traded 
on—
483 
† HR 1 EAS 
‘‘(aa) a national securities 
exchange which is registered with 
the Securities and Exchange Com-
mission, 
‘‘(bb) the national market 
system established pursuant to 
section 11A of the Securities and 
Exchange Act of 1934, or 
‘‘(cc) any other exchange or 
other market which the Secretary 
has determined in guidance issued 
under 
section 
1296(e)(1)(A)(ii) 
has rules adequate to carry out 
the purposes of part VI of sub-
chapter P of chapter 1 of subtitle 
A. 
‘‘(II) NONAPPLICATION
OF
CER-
TAIN
FOREIGN-INFLUENCED
ENTITY 
RULES.—Subparagraph (D)(i)(I) shall 
not apply in the case of any entity— 
‘‘(aa) the securities of which 
are regularly traded in a manner 
described in subclause (I), or 
‘‘(bb) for which not less than 
80 percent of the equity securities
484 
† HR 1 EAS 
of such entity are owned directly 
or indirectly by an entity which 
is described in item (aa). 
‘‘(III) EXCLUSION OF EXCHANGES 
OR MARKETS IN COVERED NATIONS.— 
Subclause (I)(cc) shall not apply with 
respect to any exchange or market 
which— 
‘‘(aa) is incorporated or or-
ganized under the laws of a cov-
ered nation, or 
‘‘(bb) has its principal place 
of business in a covered nation. 
‘‘(ii) 
ADDITIONAL
FOREIGN-CON-
TROLLED ENTITY REQUIREMENTS FOR PUB-
LICLY TRADED COMPANIES.—In the case of 
an entity described in clause (i)(I), such en-
tity shall be deemed to be a foreign-con-
trolled entity under subparagraph (C)(v) if 
such entity is controlled (as determined 
under subparagraph (G)) by— 
‘‘(I) 1 or more specified foreign 
entities (as determined without regard 
to subparagraph (B)(v)) that are each 
required to report their beneficial own-
485 
† HR 1 EAS 
ership pursuant to a rule described in 
clause (iii)(I)(bb), or 
‘‘(II) 1 or more foreign-controlled 
entities (as determined without regard 
to subparagraph (C)(v)) that are each 
required to report their beneficial own-
ership pursuant to a rule described in 
such clause. 
‘‘(iii) 
ADDITIONAL
FOREIGN-INFLU-
ENCED
ENTITY
REQUIREMENTS
FOR
PUB-
LICLY TRADED COMPANIES.—In the case of 
an entity described in clause (i)(II), such 
entity shall be deemed to be a foreign-influ-
enced entity under subparagraph (D)(i)(I) 
if— 
‘‘(I) during the taxable year— 
‘‘(aa) a specified foreign en-
tity has the authority to appoint 
a covered officer of such entity, 
‘‘(bb) a single specified for-
eign entity required to report its 
beneficial ownership under Rule 
13d-3 of the Securities and Ex-
change Act of 1934 (or, in the case 
of an exchange or market de-
486 
† HR 1 EAS 
scribed in clause (i)(I)(cc), an 
equivalent rule) owns not less 
than 25 percent of such entity, or 
‘‘(cc) 1 or more specified for-
eign entities that are each re-
quired to report their beneficial 
ownership under Rule 13d-3 of 
the Securities and Exchange Act 
of 1934 own, in the aggregate, not 
less than 40 percent of such enti-
ty, or 
‘‘(II) such entity has issued debt, 
as part of an original issuance, in ex-
cess of 15 percent of its publicly-traded 
debt to 1 or more specified foreign enti-
ties. 
‘‘(F) COVERED OFFICER.—For purposes of 
this paragraph, the term ‘covered officer’ means, 
with respect to an entity— 
‘‘(i) a member of the board of directors, 
board of supervisors, or equivalent gov-
erning body, 
‘‘(ii) an executive-level officer, includ-
ing the president, chief executive officer, 
chief operating officer, chief financial offi-
487 
† HR 1 EAS 
cer, general counsel, or senior vice president, 
or 
‘‘(iii) an individual having powers or 
responsibilities similar to those of officers or 
members described in clause (i) or (ii). 
‘‘(G) DETERMINATION
OF
CONTROL.—For 
purposes of subparagraph (C)(v), the term ‘con-
trol’ means— 
‘‘(i) in the case of a corporation, own-
ership (by vote or value) of more than 50 
percent of the stock in such corporation, 
‘‘(ii) in the case of a partnership, own-
ership of more than 50 percent of the profits 
interests or capital interests in such part-
nership, or 
‘‘(iii) in any other case, ownership of 
more than 50 percent of the beneficial inter-
ests in the entity. 
‘‘(H) DETERMINATION
OF
OWNERSHIP.— 
For 
purposes 
of 
this 
paragraph, 
section 
318(a)(2) shall apply for purposes of deter-
mining ownership of stock in a corporation. 
Similar principles shall apply for purposes of 
determining ownership of interests in any other 
entity.
488 
† HR 1 EAS 
‘‘(I) OTHER DEFINITIONS.—For purposes of 
this paragraph— 
‘‘(i) APPLICABLE CRITICAL MINERAL.— 
The term ‘applicable critical mineral’ has 
the same meaning given such term under 
section 45X(c)(6). 
‘‘(ii) COVERED
NATION.—The term 
‘covered nation’ has the same meaning 
given such term under section 4872(f)(2) of 
title 10, United States Code. 
‘‘(iii) 
ELIGIBLE
COMPONENT.—The 
term ‘eligible component’ has the same 
meaning given such term under section 
45X(c)(1). 
‘‘(iv) 
ENERGY
STORAGE
TECH-
NOLOGY.—The term ‘energy storage tech-
nology’ has the same meaning given such 
term under section 48E(c)(2). 
‘‘(v) QUALIFIED FACILITY.—The term 
‘qualified facility’ means— 
‘‘(I) a qualified facility, as de-
fined in section 45Y(b)(1), and 
‘‘(II) a qualified facility, as de-
fined in section 48E(b)(3).
489 
† HR 1 EAS 
‘‘(vi) RELATED.—The term ‘related’ 
shall have the same meaning given such 
term under sections 267(b) and 707(b). 
‘‘(J) BEGINNING
OF
CONSTRUCTION.—For 
purposes of applying any provision under this 
paragraph, the beginning of construction with 
respect to any property shall be determined pur-
suant to rules similar to the rules under Internal 
Revenue Service Notice 2013–29 and Internal 
Revenue Service Notice 2018-59 (as well as any 
subsequently issued guidance clarifying, modi-
fying, or updating either such Notice), as in ef-
fect on January 1, 2025. 
‘‘(K) REGULATIONS
AND
GUIDANCE.—The 
Secretary may prescribe such regulations and 
guidance as may be necessary or appropriate to 
carry out the provisions of this paragraph, in-
cluding rules to prevent the circumvention of 
any rules or restrictions with respect to prohib-
ited foreign entities. 
‘‘(52) MATERIAL ASSISTANCE FROM A PROHIB-
ITED FOREIGN ENTITY.— 
‘‘(A) IN GENERAL.—The term ‘material as-
sistance from a prohibited foreign entity’ 
means—
490 
† HR 1 EAS 
‘‘(i) with respect to any qualified facil-
ity or energy storage technology, a material 
assistance cost ratio which is less than the 
threshold percentage applicable under sub-
paragraph (B), or 
‘‘(ii) with respect to any facility which 
produces eligible components, a material as-
sistance cost ratio which is less than the 
threshold percentage applicable under sub-
paragraph (C). 
‘‘(B) THRESHOLD PERCENTAGE FOR QUALI-
FIED FACILITIES AND ENERGY STORAGE TECH-
NOLOGY.—For purposes of subparagraph (A)(i), 
the threshold percentage shall be— 
‘‘(i) in the case of a qualified facility 
the construction of which begins— 
‘‘(I) during calendar year 2026, 
40 percent, 
‘‘(II) during calendar year 2027, 
45 percent, 
‘‘(III) during calendar year 2028, 
50 percent, 
‘‘(IV) during calendar year 2029, 
55 percent, and
491 
† HR 1 EAS 
‘‘(V) after December 31, 2029, 60 
percent, and 
‘‘(ii) in the case of energy storage tech-
nology the construction of which begins— 
‘‘(I) during calendar year 2026, 
55 percent, 
‘‘(II) during calendar year 2027, 
60 percent, 
‘‘(III) during calendar year 2028, 
65 percent, 
‘‘(IV) during calendar year 2029, 
70 percent, and 
‘‘(V) after December 31, 2029, 75 
percent. 
‘‘(C) THRESHOLD PERCENTAGE FOR ELIGI-
BLE COMPONENTS.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the threshold percent-
age shall be— 
‘‘(I) in the case of any solar en-
ergy component (as such term is de-
fined in section 45X(c)(3)(A)) which is 
sold— 
‘‘(aa) during calendar year 
2026, 50 percent,
492 
† HR 1 EAS 
‘‘(bb) during calendar year 
2027, 60 percent, 
‘‘(cc) during calendar year 
2028, 70 percent, 
‘‘(dd) during calendar year 
2029, 80 percent, and 
‘‘(ee) 
after 
December 
31, 
2029, 85 percent, 
‘‘(II) in the case of any wind en-
ergy component (as such term is de-
fined in section 45X(c)(4)(A)) which is 
sold— 
‘‘(aa) during calendar year 
2026, 85 percent, and 
‘‘(bb) during calendar year 
2027, 90 percent, 
‘‘(III) in the case of any inverter 
described 
in 
subparagraphs 
(B) 
through (G) of section 45X(c)(2) which 
is sold— 
‘‘(aa) during calendar year 
2026, 50 percent, 
‘‘(bb) during calendar year 
2027, 55 percent,
493 
† HR 1 EAS 
‘‘(cc) during calendar year 
2028, 60 percent, 
‘‘(dd) during calendar year 
2029, 65 percent, and 
‘‘(ee) 
after 
December 
31, 
2029, 70 percent, 
‘‘(IV) in the case of any quali-
fying battery component (as such term 
is defined in section 45X(c)(5)(A)) 
which is sold— 
‘‘(aa) during calendar year 
2026, 60 percent, 
‘‘(bb) during calendar year 
2027, 65 percent, 
‘‘(cc) during calendar year 
2028, 70 percent, 
‘‘(dd) during calendar year 
2029, 80 percent, and 
‘‘(ee) 
after 
December 
31, 
2029, 85 percent, and 
‘‘(V) subject to clause (ii), in the 
case of any applicable critical mineral 
(as such term is defined in section 
45X(c)(6)) which is sold—
494 
† HR 1 EAS 
‘‘(aa) after December 31, 
2025, and before January 1, 2030, 
0 percent, 
‘‘(bb) during calendar year 
2030, 25 percent, 
‘‘(cc) during calendar year 
2031, 30 percent, 
‘‘(dd) during calendar year 
2032, 40 percent, and 
‘‘(ee) 
after 
December 
31, 
2032, 50 percent. 
‘‘(ii) ADJUSTED THRESHOLD PERCENT-
AGE
FOR
APPLICABLE
CRITICAL
MIN-
ERALS.—Not later than December 31, 2027, 
the Secretary shall issue threshold percent-
ages for each of the applicable critical min-
erals described in section 45X(c)(6)), which 
shall— 
‘‘(I) apply in lieu of the threshold 
percentage determined under clause 
(i)(V) for each calendar year, and 
‘‘(II) equal or exceed the threshold 
percentage 
which 
would 
otherwise 
apply with respect to such applicable 
critical mineral under such clause for
495 
† HR 1 EAS 
such calendar year, taking into ac-
count— 
‘‘(aa) 
domestic 
geographic 
availability, 
‘‘(bb) 
supply 
chain 
con-
straints, 
‘‘(cc) domestic processing ca-
pacity needs, and 
‘‘(dd) national security con-
cerns. 
‘‘(D) MATERIAL ASSISTANCE COST RATIO.— 
‘‘(i) QUALIFIED
FACILITIES
AND
EN-
ERGY
STORAGE
TECHNOLOGY.—For pur-
poses of subparagraph (A)(i), the term ‘ma-
terial assistance cost ratio’ means the 
amount (expressed as a percentage) equal to 
the quotient of— 
‘‘(I) an amount equal to— 
‘‘(aa) the total direct costs to 
the taxpayer attributable to all 
manufactured products (including 
components) which are incor-
porated into the qualified facility 
or energy storage technology upon 
completion of construction, minus
496 
† HR 1 EAS 
‘‘(bb) the total direct costs to 
the taxpayer attributable to all 
manufactured products (including 
components) which are— 
‘‘(AA) incorporated into 
the qualified facility or en-
ergy storage technology upon 
completion of construction, 
and 
‘‘(BB) mined, produced, 
or manufactured by a pro-
hibited foreign entity, di-
vided by 
‘‘(II) the amount described in sub-
clause (I)(aa). 
‘‘(ii) 
ELIGIBLE
COMPONENTS.—For 
purposes of subparagraph (A)(ii), the term 
‘material assistance cost ratio’ means the 
amount (expressed as a percentage) equal to 
the quotient of— 
‘‘(I) an amount equal to— 
‘‘(aa) with respect to an eli-
gible component, the total direct 
material costs that are paid or in-
curred (within the meaning of sec-
497 
† HR 1 EAS 
tion 461 and any regulations 
issued under section 263A) by the 
taxpayer for production of such 
eligible component, minus 
‘‘(bb) with respect to an eli-
gible component, the total direct 
material costs that are paid or in-
curred (within the meaning of sec-
tion 461 and any regulations 
issued under section 263A) by the 
taxpayer for production of such 
eligible 
component 
that 
are 
mined, produced, or manufactured 
by a prohibited foreign entity, di-
vided by 
‘‘(II) the amount described in sub-
clause (I)(aa). 
‘‘(iii) SAFE HARBOR TABLES.— 
‘‘(I) IN GENERAL.—Not later than 
December 31, 2026, the Secretary shall 
issue safe harbor tables (and such other 
guidance as deemed necessary) to— 
‘‘(aa) identify the percentage 
of total direct costs of any manu-
factured product which is attrib-
498 
† HR 1 EAS 
utable to a prohibited foreign en-
tity, 
‘‘(bb) identify the percentage 
of total direct material costs of 
any eligible component which is 
attributable to a prohibited for-
eign entity, and 
‘‘(cc) provide all rules nec-
essary to determine the amount of 
a taxpayer’s material assistance 
from a prohibited foreign entity 
within the meaning of this para-
graph. 
‘‘(II) SAFE
HARBORS
PRIOR
TO 
ISSUANCE.—For purposes of this para-
graph, prior to the date on which the 
Secretary issues the safe harbor tables 
described in subclause (I), and for con-
struction of a qualified facility or en-
ergy storage technology which begins 
on or before the date which is 60 days 
after the date of issuance of such tables, 
a taxpayer may— 
‘‘(aa) use the tables included 
in Internal Revenue Service No-
499 
† HR 1 EAS 
tice 2025–08 to establish the per-
centage of the total direct costs of 
any listed eligible component and 
any manufactured product, and 
‘‘(bb) rely on a certification 
by the supplier of the manufac-
tured product, eligible component, 
or constituent element, material, 
or subcomponent of an eligible 
component— 
‘‘(AA) of the total direct 
costs or the total direct mate-
rial costs, as applicable, of 
such product or component 
that was not produced or 
manufactured by a prohib-
ited foreign entity, or 
‘‘(BB) that such product 
or component was not pro-
duced or manufactured by a 
prohibited foreign entity. 
‘‘(III) 
EXCEPTION.—Notwith-
standing subclauses (I) and (II)— 
‘‘(aa) if the taxpayer knows 
(or has reason to know) that a
500 
† HR 1 EAS 
manufactured product or eligible 
component was produced or man-
ufactured by a prohibited foreign 
entity, the taxpayer shall treat all 
direct costs with respect to such 
manufactured product, or all di-
rect material costs with respect to 
such eligible component, as attrib-
utable to a prohibited foreign en-
tity, and 
‘‘(bb) if the taxpayer knows 
(or has reason to know) that the 
certification referred to in sub-
clause (II)(bb) pertaining to a 
manufactured product or eligible 
component is inaccurate, the tax-
payer may not rely on such cer-
tification. 
‘‘(IV) CERTIFICATION
REQUIRE-
MENT.—In a manner consistent with 
Treasury Regulation section 1.45X– 
4(c)(4)(i) (as in effect on the date of 
enactment of this paragraph), the cer-
tification referred to in subclause 
(II)(bb) shall—
501 
† HR 1 EAS 
‘‘(aa) include— 
‘‘(AA) the supplier’s em-
ployer identification number, 
or 
‘‘(BB) any such similar 
identification number issued 
by a foreign government, 
‘‘(bb) be signed under pen-
alties of perjury, 
‘‘(cc) be retained by the sup-
plier and the taxpayer for a pe-
riod of not less than 6 years and 
shall be provided to the Secretary 
upon request, and 
‘‘(dd) be from the supplier 
from which the taxpayer pur-
chased any manufactured product, 
eligible component, or constituent 
elements, materials, or subcompo-
nents of an eligible component, 
stating— 
‘‘(AA) that such prop-
erty was not produced or 
manufactured by a prohib-
ited foreign entity and that
502 
† HR 1 EAS 
the supplier does not know 
(or have reason to know) that 
any prior supplier in the 
chain of production of that 
property is a prohibited for-
eign entity, 
‘‘(BB) for purposes of 
section 45X, the total direct 
material costs for each com-
ponent, constituent element, 
material, or subcomponent 
that were not produced or 
manufactured by a prohib-
ited foreign entity, or 
‘‘(CC) for purposes of 
section 45Y or section 48E, 
the total direct costs attrib-
utable to all manufactured 
products that were not pro-
duced or manufactured by a 
prohibited foreign entity. 
‘‘(iv) EXISTING CONTRACT.—Upon the 
election of the taxpayer (in such form and 
manner as the Secretary shall designate), in 
the case of any manufactured product, eligi-
503 
† HR 1 EAS 
ble component, or constituent element, mate-
rial, or subcomponent of an eligible compo-
nent which is— 
‘‘(I) acquired by the taxpayer, or 
manufactured or assembled by or for 
the taxpayer, pursuant to a binding 
written contract which was entered 
into prior to June 16, 2025, and 
‘‘(II)(aa) placed into service be-
fore January 1, 2030 (or, in the case 
of an applicable facility, as defined in 
section 45Y(d)(4)(B), before January 
1, 2028) in a facility the construction 
of which began before August 1, 2025, 
or 
‘‘(bb) in the case of a constituent 
element, material, or subcomponent, 
used in a product sold before January 
1, 2030, 
the cost to the taxpayer with respect to such 
product, component, element, material, or 
subcomponent shall not be included for pur-
poses of determining the material assistance 
cost ratio under this subparagraph.
504 
† HR 1 EAS 
‘‘(v) ANTI-CIRCUMVENTION
RULES.— 
The Secretary shall prescribe such regula-
tions and guidance as may be necessary or 
appropriate to prevent circumvention of the 
rules under this subparagraph, including 
prevention of— 
‘‘(I) any abuse of the exception 
provided under clause (iv) through the 
stockpiling of any manufactured prod-
uct, eligible component, or constituent 
element, material, or subcomponent of 
an eligible component during any pe-
riod prior to the application of the re-
quirements under this paragraph, or 
‘‘(II) any evasion with respect to 
the requirements of this subparagraph 
where the facts and circumstances dem-
onstrate that the beginning of construc-
tion of a qualified facility or energy 
storage technology has not in fact oc-
curred. 
‘‘(E) OTHER
DEFINITIONS.—For purposes 
of this paragraph— 
‘‘(i) ELIGIBLE COMPONENT.—The term 
‘eligible component’ means—
505 
† HR 1 EAS 
‘‘(I) any property described in 
section 45X(c)(1), or 
‘‘(II) any component which is 
identified by the Secretary pursuant to 
regulations or guidance issued under 
subparagraph (G). 
‘‘(ii) 
ENERGY
STORAGE
TECH-
NOLOGY.—The term ‘energy storage tech-
nology’ has the same meaning given such 
term under section 48E(c)(2). 
‘‘(iii) MANUFACTURED PRODUCT.—The 
term ‘manufactured product’ means— 
‘‘(I) 
a 
manufactured 
product 
which is a component of a qualified fa-
cility, 
as 
described 
in 
section 
45Y(g)(11)(B) 
and 
any 
guidance 
issued thereunder, or 
‘‘(II) any product which is identi-
fied by the Secretary pursuant to regu-
lations or guidance issued under sub-
paragraph (G). 
‘‘(iv) QUALIFIED FACILITY.—The term 
‘qualified facility’ means— 
‘‘(I) a qualified facility, as de-
fined in section 45Y(b)(1),
506 
† HR 1 EAS 
‘‘(II) a qualified facility, as de-
fined in section 48E(b)(3), and 
‘‘(III) any qualified interconnec-
tion property (as defined in section 
48E(b)(4)) which is part of the quali-
fied investment with respect to a quali-
fied facility (as described in section 
48E(b)(1)). 
‘‘(F) DETERMINATION OF OWNERSHIP; BE-
GINNING
OF
CONSTRUCTION.—Rules similar to 
the rules under subparagraphs (H) and (J) of 
paragraph (51) shall apply for purposes of this 
paragraph. 
‘‘(G) REGULATIONS
AND
GUIDANCE.—The 
Secretary may prescribe such regulations and 
guidance as may be necessary or appropriate to 
carry out the provisions of this paragraph, in-
cluding— 
‘‘(i) identification of components or 
products for purposes of clauses (i) and (iii) 
of subparagraph (E), and 
‘‘(ii) for purposes of subparagraph 
(A)(ii), rules to address facilities which 
produce more than one eligible component.’’.
507 
† HR 1 EAS 
(d) DENIAL
OF CREDIT
FOR CERTAIN WIND
AND 
SOLAR LEASING ARRANGEMENTS.—Section 45Y is amend-
ed by adding at the end the following new subsection: 
‘‘(h) DENIAL OF CREDIT FOR WIND AND SOLAR LEAS-
ING ARRANGEMENTS.—No credit shall be determined under 
this section with respect to any production of electricity 
during the taxable year with respect to property described 
in paragraph (1) or (4) of section 25D(d) (as applied by 
substituting ‘lessee’ for ‘taxpayer’) if the taxpayer rents or 
leases such property to a third party during such taxable 
year.’’. 
(e) EMISSIONS RATES TABLES.—Section 45Y(b)(2)(C) 
is amended by adding at the end the following new clause: 
‘‘(iii) EXISTING
STUDIES.—For pur-
poses of clause (i), in determining green-
house gas emissions rates for types or cat-
egories of facilities for the purpose of deter-
mining whether a facility satisfies the re-
quirements under paragraph (1), the Sec-
retary shall consider studies published on or 
before the date of enactment of this clause 
which demonstrate a net lifecycle greenhouse 
gas emissions rate which is not greater than 
zero using widely accepted lifecycle assess-
ment concepts, such as concepts described in
508 
† HR 1 EAS 
standards developed by the International 
Organization for Standardization.’’. 
(f) NUCLEAR ENERGY COMMUNITIES.— 
(1) IN GENERAL.—Section 45(b)(11) is amend-
ed— 
(A) in subparagraph (B)— 
(i) in clause (ii)(II), by striking ‘‘or’’ 
at the end, 
(ii) in clause (iii)(II), by striking the 
period at the end and inserting ‘‘, or’’, and 
(iii) by adding at the end the following 
new clause: 
‘‘(iv) for purposes of any qualified fa-
cility which is an advanced nuclear facility, 
a metropolitan statistical area which has 
(or, at any time during the period begin-
ning after December 31, 2009, had) 0.17 
percent or greater direct employment related 
to the advancement of nuclear power, in-
cluding employment related to— 
‘‘(I) an advanced nuclear facility, 
‘‘(II) advanced nuclear power re-
search and development, 
‘‘(III) nuclear fuel cycle research, 
development, or production, including
509 
† HR 1 EAS 
mining, 
enrichment, 
manufacture, 
storage, disposal, or recycling of nu-
clear fuel, and 
‘‘(IV) the manufacturing or as-
sembly of components used in an ad-
vanced nuclear facility.’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) ADVANCED NUCLEAR FACILITIES.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), for purposes of subparagraph (B)(iv), 
the term ‘advanced nuclear facility’ means 
any nuclear facility the reactor design for 
which is approved in the manner described 
in section 45J(d)(2). 
‘‘(ii) SPECIAL RULE.—For purposes of 
clause (i), a facility shall be deemed to have 
a reactor design which is approved in the 
manner described in section 45J(d)(2) if the 
Nuclear Regulatory Commission has au-
thorized construction and issued a site-spe-
cific construction permit or combined li-
cense with respect to such facility (without 
regard to whether the reactor design was 
approved after December 31, 1993).’’.
510 
† HR 1 EAS 
(2) NONAPPLICATION
FOR
CLEAN
ELECTRICITY 
INVESTMENT
CREDIT.—Section 48E(a)(3)(A)(i) is 
amended by inserting ‘‘, as applied without regard to 
clause (iv) thereof’’ after ‘‘section 45(b)(11)(B)’’. 
(g) CONFORMING AMENDMENTS.—Section 45Y(b)(1) is 
amended— 
(1) by redesignating subparagraph (D) as sub-
paragraph (E), and 
(2) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) DETERMINATION
OF
CAPACITY.—For 
purposes of subparagraph (C), additions of ca-
pacity of a facility shall be determined in any 
reasonable manner, including based on— 
‘‘(i) determinations by, or reports to, 
the Federal Energy Regulatory Commission 
(including interconnection agreements), the 
Nuclear Regulatory Commission, or any 
similar entity, reflecting additions of capac-
ity, 
‘‘(ii) determinations or reports reflect-
ing additions of capacity made by an inde-
pendent professional engineer, 
‘‘(iii) reports to, or issued by, regional 
transmission organizations or independent
511 
† HR 1 EAS 
system operators reflecting additions of ca-
pacity, or 
‘‘(iv) any other method or manner pro-
vided by the Secretary.’’. 
(h) PROHIBITION ON TRANSFER OF CREDITS TO SPEC-
IFIED FOREIGN ENTITIES.—Section 6418(g) is amended by 
adding at the end the following new paragraph: 
‘‘(5) PROHIBITION ON TRANSFER OF CREDITS TO 
SPECIFIED FOREIGN ENTITIES.—With respect to any 
eligible credit described in clause (iii), (iv), (vi), (vii), 
(viii), or (xi) of subsection (f)(1)(A), an eligible tax-
payer may not elect to transfer any portion of such 
credit to a taxpayer that is a specified foreign entity 
(as defined in section 7701(a)(51)(B)).’’. 
(i) EXTENSION OF PERIOD OF LIMITATIONS FOR ER-
RORS RELATING TO DETERMINING OF MATERIAL ASSIST-
ANCE FROM
A PROHIBITED FOREIGN ENTITY.—Section 
6501 is amended— 
(1) by redesignating subsection (o) as subsection 
(p), and 
(2) by inserting after subsection (n) the following 
new subsection: 
‘‘(o) MATERIAL ASSISTANCE FROM
A PROHIBITED 
FOREIGN ENTITY.—In the case of a deficiency attributable 
to an error with respect to the determination under section
512 
† HR 1 EAS 
7701(a)(52) for any taxable year, such deficiency may be 
assessed at any time within 6 years after the return for 
such year was filed.’’. 
(j) IMPOSITION OF ACCURACY-RELATED PENALTIES.— 
(1) IN GENERAL.—Section 6662 is amended by 
adding at the end the following new subsection: 
‘‘(m) SUBSTANTIAL UNDERSTATEMENT
OF INCOME 
TAX DUE
TO DISALLOWANCE
OF APPLICABLE ENERGY 
CREDITS.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer for 
which there is a disallowance of an applicable energy 
credit for any taxable year, for purposes of deter-
mining whether there is a substantial understatement 
of income tax for such taxable year, subsection (d)(1) 
shall be applied— 
‘‘(A) in subparagraphs (A) and (B), by sub-
stituting ‘1 percent’ for ‘10 percent’ each place it 
appears, and 
‘‘(B) without regard to subparagraph (C). 
‘‘(2) DISALLOWANCE OF AN APPLICABLE ENERGY 
CREDIT.—For purposes of this subsection, the term 
‘disallowance of an applicable energy credit’ means 
the disallowance of a credit under section 45X, 45Y, 
or 48E by reason of overstating the material assist-
ance cost ratio (as determined under section
513 
† HR 1 EAS 
7701(a)(52)) with respect to any qualified facility, 
energy storage technology, or facility which produces 
eligible components.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6417(d)(6) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) DISALLOWANCE
OF
AN
APPLICABLE 
ENERGY CREDIT.—In the case of an applicable 
entity which made an election under subsection 
(a) with respect to an applicable credit for which 
there is a disallowance described in section 
6662(m)(2), subparagraph (A) shall apply with 
respect to any excessive payment resulting from 
such disallowance.’’. 
(k) PENALTY FOR SUBSTANTIAL MISSTATEMENTS ON 
CERTIFICATION PROVIDED BY SUPPLIER.— 
(1) IN GENERAL.—Part I of subchapter B of 
chapter 68 is amended by inserting after section 
6695A the following new section: 
‘‘SEC. 6695B. PENALTY FOR SUBSTANTIAL MISSTATEMENTS 
ON CERTIFICATION PROVIDED BY SUPPLIER. 
‘‘(a) IMPOSITION OF PENALTY.—If— 
‘‘(1) a person— 
‘‘(A) provides a certification described in 
clause (iii)(II)(bb) of section 7701(a)(52)(D)
514 
† HR 1 EAS 
with respect to any manufactured product, eligi-
ble component, or constituent element, material, 
or subcomponent of an eligible component, and 
‘‘(B) knows, or reasonably should have 
known, that the certification would be used in 
connection with a determination under such sec-
tion, 
‘‘(2) such person knows, or reasonably should 
have known, that such certification is inaccurate or 
false with respect to— 
‘‘(A) whether such property was produced or 
manufactured by a prohibited foreign entity, or 
‘‘(B) the total direct costs or total direct 
material costs of such property that was not pro-
duced or manufactured by a prohibited foreign 
entity that were provided on such certification, 
and 
‘‘(3) the inaccuracy or falsity described in para-
graph (2) resulted in the disallowance of an applica-
ble energy credit (as defined in section 6662(m)(2)) 
and an understatement of income tax (within the 
meaning of section 6662(d)(2)) for the taxable year in 
an amount which exceeds the lesser of— 
‘‘(A) 5 percent of the tax required to be 
shown on the return for the taxable year, or
515 
† HR 1 EAS 
‘‘(B) $100,000, 
then such person shall pay a penalty in the amount 
determined under subsection (b). 
‘‘(b) AMOUNT OF PENALTY.—The amount of the pen-
alty imposed under subsection (a) on any person with re-
spect to a certification shall be equal to the greater of— 
‘‘(1) 10 percent of the amount of the under-
payment (as defined in section 6664(a)) solely attrib-
utable to the inaccuracy or falsity described in sub-
section (a)(2), or 
‘‘(2) $5,000. 
‘‘(c) EXCEPTION.—No penalty shall be imposed under 
subsection (a) if the person establishes to the satisfaction 
of the Secretary that any inaccuracy or falsity described 
in subsection (a)(2) is due to a reasonable cause and not 
willful neglect. 
‘‘(d) DEFINITIONS.—Any term used in this section 
which is also used in section 7701(a)(52) shall have the 
meaning given such term in such section.’’. 
(2) CLERICAL AMENDMENTS.— 
(A) Section 6696 is amended— 
(i) in the heading, by striking ‘‘AND 
6695A’’ and inserting ‘‘6695A, AND 6695B’’,
516 
† HR 1 EAS 
(ii) in subsections (a), (b), and (e), by 
striking ‘‘and 6695A’’ each place it appears 
and inserting ‘‘6695A, and 6695B’’, 
(iii) in subsection (c), by striking ‘‘or 
6695A’’ and inserting ‘‘6695A, or 6695B’’, 
and 
(iv) in subsection (d)— 
(I) in paragraph (1), by inserting 
‘‘(or, in the case of any penalty under 
section 6695B, 6 years)’’ after ‘‘as-
sessed within 3 years’’, and 
(II) in paragraph (2), by insert-
ing ‘‘(or, in the case of any claim for 
refund of an overpayment of any pen-
alty assessed under section 6695B, 6 
years)’’ after ‘‘filed within 3 years’’. 
(B) The table of sections for part I of sub-
chapter B of chapter 68 is amended by inserting 
after item relating to section 6695A the following 
new item: 
‘‘Sec. 6695B. Penalty for substantial misstatements on certification provided by 
supplier.’’. 
(l) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2), (3), and (4), the amendments made by
517 
† HR 1 EAS 
this section shall apply to taxable years beginning 
after the date of enactment of this Act. 
(2) MATERIAL
ASSISTANCE
FROM
PROHIBITED 
FOREIGN ENTITIES.—The amendments made by sub-
section (b)(1) shall apply to facilities for which con-
struction begins after December 31, 2025. 
(3) PENALTY FOR SUBSTANTIAL MISSTATEMENTS 
ON
CERTIFICATION
PROVIDED
BY
SUPPLIER.—The 
amendments made by subsection (k) shall apply to 
certifications provided after December 31, 2025. 
(4) TERMINATION FOR WIND AND SOLAR FACILI-
TIES.—The amendments made by subsection (a) shall 
apply to facilities the construction of which begins 
after the date which is 12 months after the date of en-
actment of this Act. 
SEC. 70513. TERMINATION AND RESTRICTIONS ON CLEAN 
ELECTRICITY INVESTMENT CREDIT. 
(a) TERMINATION
FOR WIND
AND SOLAR FACILI-
TIES.—Section 48E(e) is amended— 
(1) in paragraph (1), by striking ‘‘The amount 
of’’ and inserting ‘‘Subject to paragraph (4), the 
amount of’’, and 
(2) by adding at the end the following new para-
graph:
518 
† HR 1 EAS 
‘‘(4) TERMINATION FOR WIND AND SOLAR FACILI-
TIES.— 
‘‘(A) IN GENERAL.—This section shall not 
apply to any qualified property placed in service 
by the taxpayer after December 31, 2027, which 
is part of an applicable facility. 
‘‘(B) APPLICABLE FACILITY.—For purposes 
of this paragraph, the term ‘applicable facility’ 
means a qualified facility which— 
‘‘(i) uses wind to produce electricity 
(within the meaning of such term as used 
in section 45(d)(1), as determined without 
regard to any requirement under such sec-
tion with respect to the date on which con-
struction of property begins), or 
‘‘(ii) uses solar energy to produce elec-
tricity (within the meaning of such term as 
used in section 45(d)(4), as determined 
without regard to any requirement under 
such section with respect to the date on 
which construction of property begins). 
‘‘(C) EXCEPTION.—This paragraph shall 
not apply with respect to any energy storage 
technology which is placed in service at any ap-
plicable facility.’’.
519 
† HR 1 EAS 
(b) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) in subsection (b)— 
(i) by redesignating paragraph (6) as 
paragraph (7), and 
(ii) by inserting after paragraph (5) 
the following new paragraph: 
‘‘(6) MATERIAL ASSISTANCE FROM PROHIBITED 
FOREIGN
ENTITIES.—The terms ‘qualified facility’ 
and ‘qualified interconnection property’ shall not in-
clude any facility or property the construction, recon-
struction, or erection of which begins after December 
31, 2025, if the construction, reconstruction, or erec-
tion of such facility or property includes any mate-
rial assistance from a prohibited foreign entity (as 
defined in section 7701(a)(52)).’’, and 
(B) in subsection (c), by adding at the end 
the following new paragraph: 
‘‘(3) MATERIAL ASSISTANCE FROM PROHIBITED 
FOREIGN ENTITIES.—The term ‘energy storage tech-
nology’ shall not include any property the construc-
tion of which begins after December 31, 2025, if the 
construction of such property includes any material
520 
† HR 1 EAS 
assistance from a prohibited foreign entity (as defined 
in section 7701(a)(52)).’’. 
(2) ADDITIONAL RESTRICTIONS.—Section 48E(d) 
is amended by adding at the end the following new 
paragraph: 
‘‘(6) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit shall be deter-
mined under subsection (a) for any taxable year 
if the taxpayer is— 
‘‘(i) a specified foreign entity (as de-
fined in section 7701(a)(51)(B)), or 
‘‘(ii) a foreign-influenced entity (as de-
fined in section 7701(a)(51)(D), without re-
gard to clause (i)(II) thereof). 
‘‘(B) EFFECTIVE CONTROL.—In the case of 
a 
taxpayer 
for 
which 
section 
7701(a)(51)(D)(i)(II) is determined to apply for 
any taxable year, no credit shall be determined 
under subsection (a) for such taxable year if such 
determination relates to a qualified facility de-
scribed in subsection (b)(3) or energy storage 
technology described in subsection (c)(2).’’. 
(3) RECAPTURE.—
521 
† HR 1 EAS 
(A) IN GENERAL.—Section 50(a) is amend-
ed— 
(i) by redesignating paragraphs (4) 
through (6) as paragraphs (5) through (7), 
respectively, 
(ii) by inserting after paragraph (3) 
the following new paragraph: 
‘‘(4) PAYMENTS TO PROHIBITED FOREIGN ENTI-
TIES.— 
‘‘(A) IN GENERAL.—If there is an applica-
ble payment made by a specified taxpayer before 
the close of the 10-year period beginning on the 
date such taxpayer placed in service investment 
credit property which is eligible for the clean 
electricity 
investment 
credit 
under 
section 
48E(a), then the tax under this chapter for the 
taxable year in which such applicable payment 
occurs shall be increased by 100 percent of the 
aggregate decrease in the credits allowed under 
section 38 for all prior taxable years which 
would have resulted solely from reducing to zero 
any credit determined under section 46 which is 
attributable to the clean electricity investment 
credit under section 48E(a) with respect to such 
property.
522 
† HR 1 EAS 
‘‘(B) APPLICABLE PAYMENT.—For purposes 
of this paragraph, the term ‘applicable payment’ 
means, with respect to any taxable year, a pay-
ment 
or 
payments 
described 
in 
section 
7701(a)(51)(D)(i)(II). 
‘‘(C) SPECIFIED TAXPAYER.—For purposes 
of this paragraph, the term ‘specified taxpayer’ 
means any taxpayer who has been allowed a 
credit under section 48E(a) for any taxable year 
beginning after the date which is 2 years after 
the date of enactment of this paragraph.’’, 
(iii) in paragraph (5), as redesignated 
by clause (i), by striking ‘‘or any applicable 
transaction to which paragraph (3)(A) ap-
plies,’’ and inserting ‘‘any applicable trans-
action to which paragraph (3)(A) applies, 
or any applicable payment to which para-
graph (4)(A) applies,’’, and 
(iv) in paragraph (7), as redesignated 
by clause (i), by striking ‘‘or (3)’’ and in-
serting ‘‘(3), or (4)’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Section 1371(d)(1) is amended by 
striking ‘‘section 50(a)(5)’’ and inserting 
‘‘section 50(a)(6)’’.
523 
† HR 1 EAS 
(ii) Section 6418(g)(3) is amended by 
striking ‘‘subsection (a)(5)’’ each place it 
appears and inserting ‘‘subsection (a)(7)’’. 
(c) DENIAL OF CREDIT FOR EXPENDITURES FOR CER-
TAIN WIND AND SOLAR LEASING ARRANGEMENTS.— 
(1) IN GENERAL.—Section 48E is amended— 
(A) by redesignating subsection (i) as sub-
section (j), and 
(B) by inserting after subsection (h) the fol-
lowing new subsection: 
‘‘(i) DENIAL
OF CREDIT
FOR EXPENDITURES
FOR 
WIND AND SOLAR LEASING ARRANGEMENTS.—No credit 
shall be determined under this section for any qualified in-
vestment during the taxable year with respect to property 
described in paragraph (1) or (4) of section 25D(d) (as ap-
plied by substituting ‘lessee’ for ‘taxpayer’) if the taxpayer 
rents or leases such property to a third party during such 
taxable year.’’. 
(2) CONFORMING RULES.—Section 50 is amend-
ed by adding at the end the following new subsection: 
‘‘(e) RULES FOR GEOTHERMAL HEAT PUMPS.—For 
purposes of this section and section 168, the ownership of 
energy property described in section 48(a)(3)(A)(vii) shall 
be determined without regard to whether such property is
524 
† HR 1 EAS 
readily usable by a person other than the lessee or service 
recipient.’’. 
(d) DOMESTIC CONTENT RULES.—Subparagraph (B) 
of section 48E(a)(3) is amended to read as follows: 
‘‘(B) DOMESTIC
CONTENT.—Rules similar 
to the rules of section 48(a)(12) shall apply, ex-
cept that, for purposes of subparagraph (B) of 
such section and the application of rules similar 
to the rules of section 45(b)(9)(B), the adjusted 
percentage 
(as 
determined 
under 
section 
45(b)(9)(C)) shall be determined as follows: 
‘‘(i) In the case of any qualified invest-
ment with respect to any qualified facility 
or energy storage technology the construc-
tion of which begins before June 16, 2025, 
40 percent (or, in the case of a qualified fa-
cility which is an offshore wind facility, 20 
percent). 
‘‘(ii) In the case of any qualified in-
vestment with respect to any qualified facil-
ity or energy storage technology the con-
struction of which begins on or after June 
16, 2025, and before January 1, 2026, 45 
percent (or, in the case of a qualified facil-
525 
† HR 1 EAS 
ity which is an offshore wind facility, 27.5 
percent). 
‘‘(iii) In the case of any qualified in-
vestment with respect to any qualified facil-
ity or energy storage technology the con-
struction of which begins during calendar 
year 2026, 50 percent (or, in the case of a 
qualified facility which is an offshore wind 
facility, 35 percent). 
‘‘(iv) In the case of any qualified in-
vestment with respect to any qualified facil-
ity or energy storage technology the con-
struction of which begins after December 31, 
2026, 55 percent.’’. 
(e) ELIMINATION OF ENERGY CREDIT FOR CERTAIN 
ENERGY PROPERTY.—Section 48(a)(2) is amended— 
(1) in subparagraph (A)(ii), by striking ‘‘2 per-
cent’’ and inserting ‘‘0 percent’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) NONAPPLICATION
OF
INCREASES
TO 
ENERGY PERCENTAGE.—For purposes of energy 
property described in subparagraph (A)(ii), the 
energy percentage applicable to such property 
pursuant to such subparagraph shall not be in-
526 
† HR 1 EAS 
creased or otherwise adjusted by any provision of 
this section.’’. 
(f) APPLICATION OF CLEAN ELECTRICITY INVESTMENT 
CREDIT TO QUALIFIED FUEL CELL PROPERTY.—Section 
48E, as amended by subsection (c), is amended— 
(1) by redesignating subsection (j) as subsection 
(k), and 
(2) by inserting after subsection (i) the following 
new subsection: 
‘‘(j) APPLICATION TO QUALIFIED FUEL CELL PROP-
ERTY.—For purposes of this section, in the case of any 
qualified fuel cell property (as defined in section 48(c)(1), 
as applied without regard to subparagraph (E) thereof)— 
‘‘(1) subsection (b)(3)(A) shall be applied with-
out regard to clause (iii) thereof, 
‘‘(2) for purposes of subsection (a)(1), the appli-
cable percentage shall be 30 percent and such percent-
age shall not be increased or otherwise adjusted by 
any other provision of this section, and 
‘‘(3) subsection (g) shall not apply.’’. 
(g) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2), (3), (4), and (5), the amendments made 
by this section shall apply to taxable years beginning 
after the date of enactment of this Act.
527 
† HR 1 EAS 
(2) DOMESTIC
CONTENT
RULES.—The amend-
ment made by subsection (d) shall apply on or after 
June 16, 2025. 
(3) ELIMINATION OF ENERGY CREDIT FOR CER-
TAIN ENERGY PROPERTY.—The amendments made by 
subsection (e) shall apply to property the construction 
of which begins on or after June 16, 2025. 
(4) APPLICATION
OF
CLEAN
ELECTRICITY
IN-
VESTMENT CREDIT TO QUALIFIED FUEL CELL PROP-
ERTY.—The amendments made by subsection (f) shall 
apply to property the construction of which begins 
after December 31, 2025. 
(5) TERMINATION FOR WIND AND SOLAR FACILI-
TIES.—The amendments made by subsection (a) shall 
apply to facilities the construction of which begins 
after the date which is 12 months after the date of en-
actment of this Act. 
SEC. 70514. PHASE-OUT AND RESTRICTIONS ON ADVANCED 
MANUFACTURING PRODUCTION CREDIT. 
(a) MODIFICATION OF PROVISION RELATING TO SALE 
OF INTEGRATED COMPONENTS.—Paragraph (4) of section 
45X(d) is amended to read as follows: 
‘‘(4) SALE OF INTEGRATED COMPONENTS.— 
‘‘(A) IN
GENERAL.—For purposes of this 
section, a person shall be treated as having sold
528 
† HR 1 EAS 
an eligible component to an unrelated person 
if— 
‘‘(i) such component (referred to in this 
paragraph as the ‘primary component’) is 
integrated, incorporated, or assembled into 
another eligible component (referred to in 
this paragraph as the ‘secondary compo-
nent’) produced within the same manufac-
turing facility as the primary component, 
and 
‘‘(ii) the secondary component is sold 
to an unrelated person. 
‘‘(B) ADDITIONAL
REQUIREMENTS.—Sub-
paragraph (A) shall only apply with respect to 
a secondary component for which not less than 
65 percent of the total direct material costs 
which are paid or incurred (within the meaning 
of section 461 and any regulations issued under 
section 263A) by the taxpayer to produce such 
secondary component are attributable to primary 
components which are mined, produced, or man-
ufactured in the United States.’’. 
(b) 
PHASE
OUT
AND
TERMINATION.—Section 
45X(b)(3) is amended—
529 
† HR 1 EAS 
(1) in the heading, by inserting ‘‘AND TERMI-
NATION’’ after ‘‘PHASE OUT’’, 
(2) in subparagraph (A), in the matter preceding 
clause (i), by striking ‘‘subparagraph (C)’’ and insert-
ing ‘‘subparagraphs (C) and (D)’’, and 
(3) by striking subparagraph (C) and inserting 
the following: 
‘‘(C) PHASE OUT FOR APPLICABLE CRITICAL 
MINERALS
OTHER
THAN
METALLURGICAL 
COAL.— 
‘‘(i) IN GENERAL.—In the case of any 
applicable critical mineral (other than met-
allurgical coal) produced after December 31, 
2030, the amount determined under this 
subsection with respect to such mineral 
shall be equal to the product of— 
‘‘(I) the amount determined under 
paragraph (1) with respect to such 
mineral, as determined without regard 
to this subparagraph, multiplied by 
‘‘(II) the phase out percentage 
under clause (ii). 
‘‘(ii) PHASE OUT PERCENTAGE FOR AP-
PLICABLE CRITICAL MINERALS OTHER THAN
530 
† HR 1 EAS 
METALLURGICAL COAL.—The phase out per-
centage under this clause is equal to— 
‘‘(I) in the case of any applicable 
critical mineral produced during cal-
endar year 2031, 75 percent, 
‘‘(II) in the case of any applicable 
critical mineral produced during cal-
endar year 2032, 50 percent, 
‘‘(III) in the case of any applica-
ble critical mineral produced during 
calendar year 2033, 25 percent, and 
‘‘(IV) in the case of any applica-
ble critical mineral produced after De-
cember 31, 2033, 0 percent. 
‘‘(D) TERMINATION FOR WIND ENERGY COM-
PONENTS.—This section shall not apply to any 
wind energy component produced and sold after 
December 31, 2027. 
‘‘(E) TERMINATION
FOR
METALLURGICAL 
COAL.—This section shall not apply to any met-
allurgical coal produced after December 31, 
2029.’’. 
(c) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45X is amended—
531 
† HR 1 EAS 
(1) in subsection (c)(1), by adding at the end the 
following new subparagraph: 
‘‘(C) MATERIAL ASSISTANCE FROM PROHIB-
ITED FOREIGN ENTITIES.—In the case of taxable 
years beginning after the date of enactment of 
this subparagraph, the term ‘eligible component’ 
shall not include any property which includes 
any material assistance from a prohibited for-
eign entity (as defined in section 7701(a)(52), as 
applied by substituting ‘used in a product sold 
before January 1, 2027’ for ‘used in a product 
sold before January 1, 2030’ in subparagraph 
(D)(iv)(II)(bb) thereof).’’, and 
(2) in subsection (d), as amended by subsection 
(a) of this section, by adding at the end the following 
new paragraph: 
‘‘(4) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.— 
‘‘(A) IN GENERAL.—No credit shall be deter-
mined under subsection (a) for any taxable year 
if the taxpayer is— 
‘‘(i) a specified foreign entity (as de-
fined in section 7701(a)(51)(B)), or
532 
† HR 1 EAS 
‘‘(ii) a foreign-influenced entity (as de-
fined in section 7701(a)(51)(D), without re-
gard to clause (i)(II) thereof). 
‘‘(B) EFFECTIVE CONTROL.—In the case of 
a 
taxpayer 
for 
which 
section 
7701(a)(51)(D)(i)(II) is determined to apply for 
any taxable year, no credit shall be determined 
under subsection (a) for such taxable year if such 
determination relates to an eligible component 
described in subsection (c)(1).’’. 
(d) MODIFICATION OF DEFINITION OF BATTERY MOD-
ULE.—Section 45X(c)(5)(B)(iii) is amended— 
(1) in subclause (I)(bb), by striking ‘‘and’’ at the 
end, 
(2) in subclause (II), by striking the period at 
the end and inserting ‘‘, and’’, and 
(3) by adding at the end the following new sub-
clause: 
‘‘(III) which is comprised of all 
other essential equipment needed for 
battery functionality, such as current 
collector assemblies and voltage sense 
harnesses, or any other essential energy 
collection equipment.’’.
533 
† HR 1 EAS 
(e) INCLUSION OF METALLURGICAL COAL AS AN AP-
PLICABLE CRITICAL MINERAL FOR PURPOSES OF THE AD-
VANCED MANUFACTURING PRODUCTION CREDIT.— 
(1) IN GENERAL.—Section 45X(c)(6) is amend-
ed— 
(A) by redesignating subparagraphs (R) 
through (Z) as subparagraphs (S) through (AA), 
respectively, and 
(B) by inserting after subparagraph (Q) the 
following new subparagraph: 
‘‘(R) METALLURGICAL COAL.—Metallurgical 
coal which is suitable for use in the production 
of steel (within the meaning of the notice pub-
lished by the Department of Energy entitled 
‘Critical Material List; Addition of Metallurgical 
Coal Used for Steelmaking’ (90 Fed. Reg. 22711 
(May 29, 2025))), regardless of whether such pro-
duction occurs inside or outside of the United 
States.’’. 
(2) CREDIT AMOUNT.—Section 45X(b)(1)(M) is 
amended by inserting ‘‘(2.5 percent in the case of 
metallurgical coal)’’ after ‘‘10 percent’’. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
534 
† HR 1 EAS 
apply to taxable years beginning after the date of en-
actment of this Act. 
(2) MODIFICATION OF PROVISION RELATING TO 
SALE
OF
INTEGRATED
COMPONENTS.—The amend-
ment made by subsection (a) shall apply to compo-
nents sold during taxable years beginning after De-
cember 31, 2026. 
SEC. 70515. RESTRICTION ON THE EXTENSION OF AD-
VANCED 
ENERGY 
PROJECT 
CREDIT 
PRO-
GRAM. 
(a) IN GENERAL.—Section 48C(e)(3)(C) is amended 
by striking ‘‘shall be increased’’ and inserting ‘‘shall not 
be increased’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall take effect on the date of enactment of this Act. 
Subchapter B—Enhancement of America-first 
Energy Policy 
SEC. 70521. EXTENSION AND MODIFICATION OF CLEAN 
FUEL PRODUCTION CREDIT. 
(a) PROHIBITION ON FOREIGN FEEDSTOCKS.— 
(1) 
IN
GENERAL.—Section 
45Z(f)(1)(A) 
is 
amended— 
(A) in clause (i)(II)(bb), by striking ‘‘and’’ 
at the end,
535 
† HR 1 EAS 
(B) in clause (ii), by striking the period at 
the end and inserting ‘‘, and’’, and 
(C) by adding at the end the following new 
clause: 
‘‘(iii) such fuel is exclusively derived 
from a feedstock which was produced or 
grown in the United States, Mexico, or 
Canada.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transportation fuel 
produced after December 31, 2025. 
(b) PROHIBITION ON NEGATIVE EMISSION RATES.— 
(1) IN GENERAL.—Section 45Z(b)(1) is amend-
ed— 
(A) by striking subparagraph (C) and in-
serting the following: 
‘‘(C) ROUNDING OF EMISSIONS RATE.—The 
Secretary may round the emissions rates under 
subparagraph (B) to the nearest multiple of 5 
kilograms of CO2e per mmBTU.’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(E) PROHIBITION ON NEGATIVE EMISSION 
RATES.—For purposes of this section, the emis-
536 
† HR 1 EAS 
sions rate for a transportation fuel may not be 
less than zero.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to emissions rates pub-
lished for transportation fuel produced after December 
31, 2025. 
(c) DETERMINATION OF EMISSIONS RATE.— 
(1) IN
GENERAL.—Section 45Z(b)(1)(B) is 
amended by adding at the end the following new 
clauses: 
‘‘(iv) EXCLUSION OF INDIRECT LAND 
USE
CHANGES.—Notwithstanding clauses 
(i), (ii), and (iii), the emissions rate shall 
be adjusted as necessary to exclude any 
emissions attributed to indirect land use 
change. Any such adjustment shall be based 
on regulations or methodologies determined 
by the Secretary. 
‘‘(v) ANIMAL MANURES.—With respect 
to any transportation fuel which is derived 
from animal manure, the Secretary— 
‘‘(I) shall provide a distinct emis-
sions rate with respect to such fuel 
based on the specific animal manure 
feedstock, which may include dairy
537 
† HR 1 EAS 
manure, swine manure, poultry ma-
nure, or any other sources as are deter-
mined appropriate by the Secretary, 
and 
‘‘(II) notwithstanding subpara-
graph (E), may provide an emissions 
rate that is less than zero.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
45Z(b)(1)(B)(i) is amended by striking ‘‘clauses (ii) 
and (iii)’’ and inserting ‘‘clauses (ii), (iii), (iv), and 
(v)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to emissions rates pub-
lished for transportation fuel produced after December 
31, 2025. 
(d) EXTENSION OF CLEAN FUEL PRODUCTION CRED-
IT.—Section 45Z(g) is amended by striking ‘‘December 31, 
2027’’ and inserting ‘‘December 31, 2029’’. 
(e) PREVENTING DOUBLE CREDIT.—Section 45Z(d)(5) 
is amended— 
(1) in subparagraph (A)— 
(A) in clause (ii), by striking ‘‘and’’ at the 
end, 
(B) in clause (iii), by striking the period at 
the end and inserting ‘‘, and’’, and
538 
† HR 1 EAS 
(C) by adding at the end the following new 
clause: 
‘‘(iv) is not produced from a fuel for 
which a credit under this section is allow-
able.’’, and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) REGULATIONS
AND
GUIDANCE.—The 
Secretary shall issue such regulations or other 
guidance as the Secretary determines necessary 
to carry out the purposes of subparagraph 
(A)(iv).’’. 
(f) 
SALES
TO
UNRELATED
PERSONS.—Section 
45Z(f)(3) is amended by adding at the end the following: 
‘‘The Secretary may prescribe additional related person 
rules similar to the rule described in the preceding sentence 
for entities which are not described in such sentence, includ-
ing rules for related persons with respect to which the tax-
payer has reason to believe will sell fuel to an unrelated 
person in a manner described in subsection (a)(4).’’. 
(g) TREATMENT OF SUSTAINABLE AVIATION FUEL.— 
(1) COORDINATION OF CREDITS.— 
(A) IN
GENERAL.—Section 6426(k) is 
amended by adding at the end the following new 
paragraph:
539 
† HR 1 EAS 
‘‘(4) COORDINATION OF CREDITS.—With respect 
to any gallon of sustainable aviation fuel in a quali-
fied mixture, this subsection shall not apply to any 
such gallon for which a credit under section 45Z is 
allowable (as determined without regard to subsection 
(a)(1)(A) of such section).’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by this paragraph shall apply to— 
(i) fuel sold or used on or after the date 
of the enactment of this Act, and 
(ii) fuel sold or used before the date of 
enactment of this Act, but only to the extent 
that claims for the credit under section 
6426(k) of the Internal Revenue Code of 
1986 with respect to such sale or use have 
not been paid or allowed as of such date. 
(2) ELIMINATION OF SPECIAL RATE.— 
(A) IN GENERAL.—Paragraph (3) of section 
45Z(a) is amended to read as follows: 
‘‘(3) DEFINITION
OF
SUSTAINABLE
AVIATION 
FUEL.—For purposes of this section, the term ‘sus-
tainable aviation fuel’ means liquid fuel, the portion 
of which is not kerosene, which is sold for use in an 
aircraft and which— 
‘‘(A) meets the requirements of—
540 
† HR 1 EAS 
‘‘(i) ASTM International Standard 
D7566, or 
‘‘(ii) the Fischer Tropsch provisions of 
ASTM 
International 
Standard 
D1655, 
Annex A1, and 
‘‘(B) is not derived from palm fatty acid 
distillates or petroleum.’’. 
(B) 
CONFORMING
AMENDMENT.—Section 
45Z(c)(1) is amended by striking ‘‘, the $1.00 
amount in subsection (a)(2)(B), the 35 cent 
amount in subsection (a)(3)(A)(i), and the $1.75 
amount in subsection (a)(3)(A)(ii)’’ and insert-
ing ‘‘and the $1.00 amount in subsection 
(a)(2)(B)’’. 
(C) EFFECTIVE
DATE.—The amendments 
made by this paragraph shall apply to fuel pro-
duced after December 31, 2025. 
(h) SUSTAINABLE AVIATION FUEL CREDIT.—Section 
6426(k), as amended by the preceding provisions of this Act, 
is amended by adding at the end the following new para-
graph: 
‘‘(5) TERMINATION.—This subsection shall not 
apply to any sale or use for any period after Sep-
tember 30, 2025.’’.
541 
† HR 1 EAS 
(i) REGISTRATION OF PRODUCERS OF FUEL ELIGIBLE 
FOR CLEAN FUEL PRODUCTION CREDIT.— 
(1) IN GENERAL.—Section 13704(b)(5) of Public 
Law 117-169 is amended by striking ‘‘after ‘section 
6426(k)(3)),’ ’’ and inserting ‘‘after ‘section 40B),’ ’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to transportation fuel pro-
duced after December 31, 2024. 
(j) EXTENSION AND MODIFICATION OF SMALL AGRI- 
BIODIESEL PRODUCER CREDIT.— 
(1) IN GENERAL.—Section 40A is amended— 
(A) in subsection (b)(4)— 
(i) in subparagraph (A), by striking 
‘‘10 cents’’ and inserting ‘‘20 cents’’, 
(ii) in subparagraph (B), by inserting 
‘‘in a manner which complies with the re-
quirements under section 45Z(f)(1)(A)(iii)’’ 
after ‘‘produced by an eligible small agri- 
biodiesel producer’’, and 
(iii) by adding at the end the following 
new subparagraph: 
‘‘(D) COORDINATION
WITH
CLEAN
FUEL 
PRODUCTION
CREDIT.—The credit determined 
under this paragraph with respect to any gallon 
of fuel shall be in addition to any credit deter-
543 
† HR 1 EAS 
beginning after the date of enactment of this 
paragraph if the taxpayer is a specified foreign 
entity (as defined in section 7701(a)(51)(B)). 
‘‘(B) OTHER
PROHIBITED
FOREIGN
ENTI-
TIES.—No credit shall be determined under sub-
section (a) for any taxable year beginning after 
the date which is 2 years after the date of enact-
ment of this paragraph if the taxpayer is a for-
eign-influenced entity (as defined in section 
7701(a)(51)(D), without regard to clause (i)(II) 
thereof).’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to taxable years beginning 
after the date of enactment of this Act. 
SEC. 70522. RESTRICTIONS ON CARBON OXIDE SEQUESTRA-
TION CREDIT. 
(a) RESTRICTIONS RELATING TO PROHIBITED FOR-
EIGN ENTITIES.—Section 45Q(f) is amended by adding at 
the end the following new paragraph: 
‘‘(10) RESTRICTIONS RELATING TO PROHIBITED 
FOREIGN ENTITIES.—No credit shall be determined 
under subsection (a) for any taxable year beginning 
after the date of enactment of this paragraph if the 
taxpayer is—
544 
† HR 1 EAS 
‘‘(A) a specified foreign entity (as defined 
in section 7701(a)(51)(B)), or 
‘‘(B) a foreign-influenced entity (as defined 
in section 7701(a)(51)(D), determined without 
regard to clause (i)(II) thereof).’’. 
(b) PARITY FOR DIFFERENT USES AND UTILIZATIONS 
OF QUALIFIED CARBON OXIDE.—Section 45Q is amend-
ed— 
(1) in subsection (a)— 
(A) in paragraph (2)(B)(ii), by adding 
‘‘and’’ at the end, 
(B) in paragraph (3), by striking subpara-
graph (B) and inserting the following: 
‘‘(B)(i) disposed of by the taxpayer in se-
cure geological storage and not used by the tax-
payer as described in clause (ii) or (iii), 
‘‘(ii) used by the taxpayer as a tertiary 
injectant in a qualified enhanced oil or natural 
gas recovery project and disposed of by the tax-
payer in secure geological storage, or 
‘‘(iii) utilized by the taxpayer in a manner 
described in subsection (f)(5).’’, and 
(C) by striking paragraph (4), 
(2) in subsection (b)— 
(A) in paragraph (1)—
545 
† HR 1 EAS 
(i) by striking subparagraph (A) and 
inserting the following: 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B) or (C), the applicable dollar 
amount shall be an amount equal to— 
‘‘(i) for any taxable year beginning in 
a calendar year after 2024 and before 2027, 
$17, and 
‘‘(ii) for any taxable year beginning in 
a calendar year after 2026, an amount 
equal to the product of $17 and the infla-
tion adjustment factor for such calendar 
year determined under section 43(b)(3)(B) 
for such calendar year, determined by sub-
stituting ‘2025’ for ‘1990’.’’, and 
(ii) in subparagraph (B), by striking 
‘‘shall be applied’’ and all that follows 
through the period and inserting ‘‘shall be 
applied by substituting ‘$36’ for ‘$17’ each 
place it appears.’’, 
(B) in paragraph (2)(B), by striking 
‘‘paragraphs (3)(A) and (4)(A)’’ and inserting 
‘‘paragraph (3)(A)’’, and 
(C) in paragraph (3), by striking ‘‘the dol-
lar amounts applicable under paragraph (3) or
546 
† HR 1 EAS 
(4)’’ and inserting ‘‘the dollar amount applicable 
under paragraph (3)’’, 
(3) in subsection (f)— 
(A) in paragraph (5)(B)(i), by striking 
‘‘(4)(B)(ii)’’ and inserting ‘‘(3)(B)(iii)’’, and 
(B) in paragraph (9), by striking ‘‘para-
graphs (3) and (4) of subsection (a)’’ and insert-
ing ‘‘subsection (a)(3)’’, and 
(4) in subsection (h)(3)(A)(ii), by striking 
‘‘paragraph (3)(A) or (4)(A) of subsection (a)’’ and 
inserting ‘‘subsection (a)(3)(A)’’. 
(c) 
CONFORMING
AMENDMENT.—Section 
6417(d)(3)(C)(i)(II)(bb) is amended by striking ‘‘para-
graph (3)(A) or (4)(A) of section 45Q(a)’’ and inserting 
‘‘section 45Q(a)(3)(A)’’. 
(d) EFFECTIVE DATES.— 
(1) RESTRICTIONS
RELATING
TO
PROHIBITED 
FOREIGN ENTITIES.—The amendment made by sub-
section (a) shall apply to taxable years beginning 
after the date of enactment of this Act. 
(2) PARITY FOR DIFFERENT USES AND UTILIZA-
TIONS OF QUALIFIED CARBON OXIDE.—The amend-
ments made subsections (b) and (c) shall apply to fa-
cilities or equipment placed in service after the date 
of enactment of this Act.
547 
† HR 1 EAS 
SEC. 70523. INTANGIBLE DRILLING AND DEVELOPMENT 
COSTS TAKEN INTO ACCOUNT FOR PURPOSES 
OF 
COMPUTING 
ADJUSTED 
FINANCIAL 
STATEMENT INCOME. 
(a) IN GENERAL.—Section 56A(c)(13) is amended— 
(1) by striking subparagraph (A) and inserting 
the following: 
‘‘(A) reduced by— 
‘‘(i) depreciation deductions allowed 
under section 167 with respect to property 
to which section 168 applies to the extent of 
the amount allowed as deductions in com-
puting taxable income for the year, and 
‘‘(ii) any deduction allowed for ex-
penses under section 263(c) (including any 
deduction for such expenses under section 
59(e) or 291(b)(2)) with respect to property 
described therein to the extent of the amount 
allowed as deductions in computing taxable 
income for the year, and’’, and 
(2) by striking subparagraph (B)(i) and insert-
ing the following: 
‘‘(i) to disregard any amount of— 
‘‘(I) depreciation expense that is 
taken into account on the taxpayer’s
548 
† HR 1 EAS 
applicable financial statement with re-
spect to such property, and 
‘‘(II) depletion expense that is 
taken into account on the taxpayer’s 
applicable financial statement with re-
spect to the intangible drilling and de-
velopment costs of such property, and’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70524. INCOME FROM HYDROGEN STORAGE, CARBON 
CAPTURE, 
ADVANCED 
NUCLEAR, 
HYDRO-
POWER, AND GEOTHERMAL ENERGY ADDED 
TO QUALIFYING INCOME OF CERTAIN PUB-
LICLY TRADED PARTNERSHIPS. 
(a) IN GENERAL.—Section 7704(d)(1)(E) is amend-
ed— 
(1) by striking ‘‘income and gains derived from 
the exploration’’ and inserting the following: ‘‘income 
and gains derived from— 
‘‘(i) the exploration’’. 
(2) by inserting ‘‘or’’ before ‘‘industrial source’’, 
and 
(3) by striking ‘‘or the transportation or storage’’ 
and all that follows and inserting the following:
549 
† HR 1 EAS 
‘‘(ii) the transportation or storage of— 
‘‘(I) any fuel described in sub-
section (b), (c), (d), (e), or (k) of sec-
tion 6426, or any alcohol fuel defined 
in section 6426(b)(4)(A) or any bio-
diesel fuel as defined in section 
40A(d)(1) or sustainable aviation fuel 
as defined in section 40B(d)(1), or 
‘‘(II) liquified hydrogen or com-
pressed hydrogen, 
‘‘(iii) in the case of a qualified facility 
(as defined in section 45Q(d), without re-
gard to any date by which construction of 
the facility or equipment is required to 
begin) not less than 50 percent of the total 
carbon oxide production of which is quali-
fied carbon oxide (as defined in section 
45Q(c))— 
‘‘(I) the generation, availability 
for such generation, or storage of elec-
tric power at such facility, or 
‘‘(II) the capture of carbon diox-
ide by such facility,
550 
† HR 1 EAS 
‘‘(iv) the production of electricity from 
any advanced nuclear facility (as defined in 
section 45J(d)(2)), 
‘‘(v) the production of electricity or 
thermal energy exclusively using a qualified 
energy resource described in subparagraph 
(D) or (H) of section 45(c)(1), or 
‘‘(vi) the operation of energy property 
described in clause (iii) or (vii) of section 
48(a)(3)(A) (determined without regard to 
any requirement under such section with re-
spect to the date on which construction of 
property begins).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70525. ALLOW FOR PAYMENTS TO CERTAIN INDIVID-
UALS WHO DYE FUEL. 
(a) IN GENERAL.—Subchapter B of chapter 65, as 
amended by the preceding provisions of this Act, is amended 
by adding at the end the following new section: 
‘‘SEC. 6435. DYED FUEL. 
‘‘(a) IN GENERAL.—If a person establishes to the satis-
faction of the Secretary that such person meets the require-
ments of subsection (b) with respect to diesel fuel or ker-
551 
† HR 1 EAS 
osene, then the Secretary shall pay to such person an 
amount (without interest) equal to the tax described in sub-
section (b)(2)(A) with respect to such diesel fuel or kerosene. 
‘‘(b) REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A person meets the require-
ments of this subsection with respect to diesel fuel or 
kerosene if such person removes from a terminal eligi-
ble indelibly dyed diesel fuel or kerosene. 
‘‘(2) ELIGIBLE INDELIBLY DYED DIESEL FUEL 
OR KEROSENE DEFINED.—The term ‘eligible indelibly 
dyed diesel fuel or kerosene’ means diesel fuel or ker-
osene— 
‘‘(A) with respect to which a tax under sec-
tion 4081 was previously paid (and not credited 
or refunded), and 
‘‘(B) which is exempt from taxation under 
section 4082(a). 
‘‘(c) CROSS REFERENCE.—For civil penalty for exces-
sive claims under this section, see section 6675.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6206 is amended— 
(A) by striking ‘‘or 6427’’ each place it ap-
pears and inserting ‘‘6427, or 6435’’, and 
(B) by striking ‘‘6420 and 6421’’ and in-
serting ‘‘6420, 6421, and 6435’’.
552 
† HR 1 EAS 
(2) Section 6430 is amended— 
(A) by striking ‘‘or’’ at the end of para-
graph (2), by striking the period at the end of 
paragraph (3) and inserting ‘‘, or’’, and by add-
ing at the end the following new paragraph: 
‘‘(4) which are removed as eligible indelibly dyed 
diesel fuel or kerosene under section 6435.’’. 
(3) Section 6675 is amended— 
(A) in subsection (a), by striking ‘‘or 6427 
(relating to fuels not used for taxable purposes)’’ 
and inserting ‘‘6427 (relating to fuels not used 
for taxable purposes), or 6435 (relating to eligi-
ble indelibly dyed fuel)’’, and 
(B) in subsection (b)(1), by striking ‘‘6421, 
or 6427,’’ and inserting ‘‘6421, 6427, or 6435,’’. 
(4) The table of sections for subchapter B of 
chapter 65, as amended by the preceding provisions 
of this Act, is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6435. Dyed fuel.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to eligible indelibly dyed diesel fuel or 
kerosene removed on or after the date that is 180 days after 
the date of the enactment of this section.
553 
† HR 1 EAS 
Subchapter C—Other Reforms 
SEC. 70531. MODIFICATIONS TO DE MINIMIS ENTRY PRIVI-
LEGE FOR COMMERCIAL SHIPMENTS. 
(a) CIVIL PENALTY.— 
(1) ADDITIONAL
PENALTY
IMPOSED.—Section 
321 of the Tariff Act of 1930 (19 U.S.C. 1321) is 
amended by adding at the end the following new sub-
section: 
‘‘(c) Any person who enters, introduces, facilitates, or 
attempts to introduce an article into the United States 
using the privilege of this section, the importation of which 
violates any other provision of United States customs law, 
shall be assessed, in addition to any other penalty permitted 
by law, a civil penalty of up to $5,000 for the first violation 
and up to $10,000 for each subsequent violation.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall take effect 30 days after the date 
of the enactment of this Act. 
(b) REPEAL
OF COMMERCIAL SHIPMENT EXCEP-
TION.— 
(1) REPEAL.—Section 321(a)(2) of such Act (19 
U.S.C. 1321(a)(2)) is amended by striking ‘‘of this 
Act, or’’ and all that follows through ‘‘subdivision (2); 
and’’ and inserting ‘‘of this Act; and’’.
554 
† HR 1 EAS 
(2) CONFORMING
REPEAL.—Subsection (c) of 
such section 321, as added by subsection (a) of this 
section, is repealed. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on July 1, 2027. 
CHAPTER 
6—ENHANCING 
DEDUCTION 
AND INCOME TAX CREDIT GUARD-
RAILS, AND OTHER REFORMS 
SEC. 70601. MODIFICATION AND EXTENSION OF LIMITATION 
ON EXCESS BUSINESS LOSSES OF NONCOR-
PORATE TAXPAYERS. 
(a) RULE MADE PERMANENT.—Section 461(l)(1) is 
amended by striking ‘‘and before January 1, 2029,’’ each 
place it appears. 
(b) ADJUSTMENT OF AMOUNTS FOR CALCULATION OF 
EXCESS BUSINESS LOSS.—Section 461(l)(3)(C) is amend-
ed— 
(1) in the matter preceding clause (i), by strik-
ing ‘‘December 31, 2018’’ and inserting ‘‘December 
31, 2025’’, and 
(2) in clause (ii), by striking ‘‘2017’’ and insert-
ing ‘‘2024’’. 
(c) EFFECTIVE DATES.—
555 
† HR 1 EAS 
(1) RULE MADE PERMANENT.—The amendments 
made by subsection (a) shall apply to taxable years 
beginning after December 31, 2026. 
(2) ADJUSTMENT OF AMOUNTS FOR CALCULATION 
OF EXCESS BUSINESS LOSS.—The amendments made 
by subsection (b) shall apply to taxable years begin-
ning after December 31, 2025. 
SEC. 70602. TREATMENT OF PAYMENTS FROM PARTNER-
SHIPS TO PARTNERS FOR PROPERTY OR 
SERVICES. 
(a) IN GENERAL.—Section 707(a)(2) is amended by 
striking ‘‘Under regulations prescribed’’ and inserting ‘‘Ex-
cept as provided’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to services performed, and property 
transferred, after the date of the enactment of this Act. 
(c) RULE OF CONSTRUCTION.—Nothing in this section, 
or the amendments made by this section, shall be construed 
to create any inference with respect to the proper treatment 
under section 707(a) of the Internal Revenue Code of 1986 
with respect to payments from a partnership to a partner 
for services performed, or property transferred, on or before 
the date of the enactment of this Act.
556 
† HR 1 EAS 
SEC. 70603. EXCESSIVE EMPLOYEE REMUNERATION FROM 
CONTROLLED GROUP MEMBERS AND ALLOCA-
TION OF DEDUCTION. 
(a) APPLICATION OF AGGREGATION RULES.—Section 
162(m) is amended by adding at the end the following new 
paragraph: 
‘‘(7) REMUNERATION FROM CONTROLLED GROUP 
MEMBERS.— 
‘‘(A) IN GENERAL.—In the case of any pub-
licly held corporation which is a member of a 
controlled group— 
‘‘(i) paragraph (1) shall be applied by 
substituting ‘specified covered employee’ for 
‘covered employee’, and 
‘‘(ii) if any person which is a member 
of such controlled group (other than such 
publicly held corporation) provides applica-
ble employee remuneration to an individual 
who is a specified covered employee of such 
controlled group and the aggregate amount 
described in subparagraph (B)(ii) with re-
spect to such specified covered employee ex-
ceeds $1,000,000— 
‘‘(I) paragraph (1) shall apply to 
such person with respect to such remu-
neration, and
557 
† HR 1 EAS 
‘‘(II) paragraph (1) shall apply to 
such publicly held corporation and to 
each such related person by sub-
stituting 
‘the 
allocable 
limitation 
amount’ for ‘$1,000,000’. 
‘‘(B) ALLOCABLE
LIMITATION
AMOUNT.— 
For purposes of this paragraph, the term ‘allo-
cable limitation amount’ means, with respect to 
any member of the controlled group referred to 
in subparagraph (A) with respect to any speci-
fied covered employee of such controlled group, 
the amount which bears the same ratio to 
$1,000,000 as— 
‘‘(i) the amount of applicable employee 
remuneration provided by such member 
with respect to such specified covered em-
ployee, bears to 
‘‘(ii) the aggregate amount of applica-
ble employee remuneration provided by all 
such members with respect to such specified 
covered employee. 
‘‘(C) SPECIFIED COVERED EMPLOYEE.—For 
purposes of this paragraph, the term ‘specified 
covered employee’ means, with respect to any 
controlled group—
558 
† HR 1 EAS 
‘‘(i) any employee described in sub-
paragraph (A), (B), or (D) of paragraph 
(3), with respect to the publicly held cor-
poration which is a member of such con-
trolled group, and 
‘‘(ii) any employee who would be de-
scribed in subparagraph (C) of paragraph 
(3) if such subparagraph were applied by 
taking into account the employees of all 
members of the controlled group. 
‘‘(D) CONTROLLED
GROUP.—For purposes 
of this paragraph, the term ‘controlled group’ 
means any group treated as a single employer 
under subsection (b), (c), (m), or (o) of section 
414.’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70604. EXCISE TAX ON CERTAIN REMITTANCE TRANS-
FERS. 
(a) IN GENERAL.—Chapter 36 is amended by insert-
ing after subchapter B the following new subchapter: 
‘‘Subchapter C—Remittance Transfers 
‘‘Sec. 4475. Imposition of tax.
559 
† HR 1 EAS 
‘‘SEC. 4475. IMPOSITION OF TAX. 
‘‘(a) IN GENERAL.—There is hereby imposed on any 
remittance transfer a tax equal to 1 percent of the amount 
of such transfer. 
‘‘(b) PAYMENT OF TAX.— 
‘‘(1) IN GENERAL.—The tax imposed by this sec-
tion with respect to any remittance transfer shall be 
paid by the sender with respect to such transfer. 
‘‘(2) COLLECTION
OF
TAX.—The remittance 
transfer provider with respect to any remittance 
transfer shall collect the amount of the tax imposed 
under subsection (a) with respect to such transfer 
from the sender and remit such tax quarterly to the 
Secretary at such time and in such manner as pro-
vided by the Secretary, 
‘‘(3) SECONDARY LIABILITY.—Where any tax im-
posed by subsection (a) is not paid at the time the 
transfer is made, then to the extent that such tax is 
not collected, such tax shall be paid by the remittance 
transfer provider. 
‘‘(c) TAX LIMITED TO CASH AND SIMILAR INSTRU-
MENTS.—The tax imposed under subsection (a) shall apply 
only to any remittance transfer for which the sender pro-
vides cash, a money order, a cashier’s check, or any other 
similar physical instrument (as determined by the Sec-
retary) to the remittance transfer provider.
560 
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‘‘(d) NONAPPLICATION TO CERTAIN NONCASH REMIT-
TANCE TRANSFERS.—Subsection (a) shall not apply to any 
remittance transfer for which the funds being transferred 
are— 
‘‘(1) withdrawn from an account held in or by 
a financial institution— 
‘‘(A) which is described in subparagraphs 
(A) through (H) of section 5312(a)(2) of title 31, 
United States Code, and 
‘‘(B) that is subject to the requirements 
under subchapter II of chapter 53 of such title, 
or 
‘‘(2) funded with a debit card or a credit card 
which is issued in the United States. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) IN GENERAL.—The terms ‘remittance trans-
fer’, ‘remittance transfer provider’, and ‘sender’ shall 
each have the respective meanings given such terms by 
section 919(g) of the Electronic Fund Transfer Act 
(15 U.S.C. 1693o–1(g)). 
‘‘(2) CREDIT CARD.—The term ‘credit card’ has 
the same meaning given such term under section 
920(c)(3) of the Electronic Fund Transfer Act (15 
U.S.C. 1693o–2(c)(3)).
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‘‘(3) DEBIT CARD.—The term ‘debit card’ has the 
same meaning given such term under section 
920(c)(2) of the Electronic Fund Transfer Act (15 
U.S.C. 1693o–2(c)(2)), without regard to subpara-
graph (B) of such section. 
‘‘(f) APPLICATION
OF ANTI-CONDUIT RULES.—For 
purposes of section 7701(l), with respect to any multiple- 
party arrangements involving the sender, a remittance 
transfer shall be treated as a financing transaction.’’. 
(b) CONFORMING AMENDMENT.—The table of sub-
chapters for chapter 36 is amended by inserting after the 
item relating to subchapter B the following new item: 
‘‘SUBCHAPTER C—REMITTANCE TRANSFERS’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to transfers made after December 31, 
2025. 
SEC. 70605. ENFORCEMENT PROVISIONS WITH RESPECT TO 
COVID-RELATED 
EMPLOYEE 
RETENTION 
CREDITS. 
(a) ASSESSABLE PENALTY FOR FAILURE TO COMPLY 
WITH DUE DILIGENCE REQUIREMENTS.— 
(1) IN GENERAL.—Any COVID–ERTC promoter 
which provides aid, assistance, or advice with respect 
to any COVID–ERTC document and which fails to 
comply with due diligence requirements imposed by 
the Secretary with respect to determining eligibility
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† HR 1 EAS 
for, or the amount of, any credit or advance payment 
of a credit under section 3134 of the Internal Revenue 
Code of 1986, shall pay a penalty of $1,000 for each 
such failure. 
(2) DUE DILIGENCE REQUIREMENTS.—The due 
diligence requirements referred to in paragraph (1) 
shall be similar to the due diligence requirements im-
posed under section 6695(g) of the Internal Revenue 
Code of 1986. 
(3) RESTRICTION TO DOCUMENTS USED IN CON-
NECTION WITH RETURNS OR CLAIMS FOR REFUND.— 
Paragraph (1) shall not apply with respect to any 
COVID–ERTC document unless such document con-
stitutes, or relates to, a return or claim for refund. 
(4) TREATMENT
AS
ASSESSABLE
PENALTY, 
ETC.—For purposes of the Internal Revenue Code of 
1986, the penalty imposed under paragraph (1) shall 
be treated as a penalty which is imposed under sec-
tion 6695(g) of such Code and assessed under section 
6201 of such Code. 
(5) SECRETARY.—For purposes of this sub-
section, the term ‘‘Secretary’’ means the Secretary of 
the Treasury or the Secretary’s delegate. 
(b) COVID–ERTC PROMOTER.—For purposes of this 
section—
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† HR 1 EAS 
(1) IN
GENERAL.—The term ‘‘COVID–ERTC 
promoter’’ means, with respect to any COVID–ERTC 
document, any person which provides aid, assistance, 
or advice with respect to such document if— 
(A) such person charges or receives a fee for 
such aid, assistance, or advice which is based on 
the amount of the refund or credit with respect 
to such document and, with respect to such per-
son’s taxable year in which such person provided 
such assistance or the preceding taxable year, the 
aggregate of the gross receipts of such person for 
aid, assistance, and advice with respect to all 
COVID-ERTC documents exceeds 20 percent of 
the gross receipts of such person for such taxable 
year, or 
(B) with respect to such person’s taxable 
year in which such person provided such assist-
ance or the preceding taxable year— 
(i) the aggregate of the gross receipts of 
such person for aid, assistance, and advice 
with respect to all COVID–ERTC docu-
ments exceeds 50 percent of the gross re-
ceipts of such person for such taxable year, 
or 
(ii) both—
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† HR 1 EAS 
(I) such aggregate gross receipts 
exceed 20 percent of the gross receipts 
of such person for such taxable year, 
and 
(II) the aggregate of the gross re-
ceipts of such person for aid, assist-
ance, and advice with respect to all 
COVID–ERTC documents (determined 
after application of paragraph (3)) ex-
ceeds $500,000. 
(2) EXCEPTION FOR CERTIFIED PROFESSIONAL 
EMPLOYER
ORGANIZATIONS.—The term ‘‘COVID– 
ERTC promoter’’ shall not include a certified profes-
sional employer organization (as defined in section 
7705 of the Internal Revenue Code of 1986). 
(3) AGGREGATION RULE.—For purposes of para-
graph (1), all persons treated as a single employer 
under subsection (a) or (b) of section 52 of the Inter-
nal Revenue Code of 1986, or subsection (m) or (o) 
of section 414 of such Code, shall be treated as 1 per-
son. 
(4) SHORT TAXABLE YEARS.—In the case of any 
taxable year of less than 12 months, a person shall be 
treated as a COVID-ERTC promoter if such person is 
described in paragraph (1) either with respect to such
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† HR 1 EAS 
taxable year or by treating any reference to such tax-
able year as a reference to the calendar year in which 
such taxable year begins. 
(c) COVID–ERTC DOCUMENT.—For purposes of this 
section, the term ‘‘COVID–ERTC document’’ means any re-
turn, affidavit, claim, or other document related to any 
credit or advance payment of a credit under section 3134 
of the Internal Revenue Code of 1986, including any docu-
ment related to eligibility for, or the calculation or deter-
mination of any amount directly related to, any such credit 
or advance payment. 
(d) LIMITATION ON CREDITS AND REFUNDS.—Not-
withstanding section 6511 of the Internal Revenue Code of 
1986, no credit under section 3134 of the Internal Revenue 
Code of 1986 shall be allowed, and no refund with respect 
to any such credit shall be made, after the date of the enact-
ment of this Act, unless a claim for such credit or refund 
was filed by the taxpayer on or before January 31, 2024. 
(e) EXTENSION OF LIMITATION ON ASSESSMENT.— 
Section 3134(l) is amended to read as follows: 
‘‘(l) EXTENSION OF LIMITATION ON ASSESSMENT.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
6501, the limitation on the time period for the assess-
ment of any amount attributable to a credit claimed
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† HR 1 EAS 
under this section shall not expire before the date that 
is 6 years after the latest of— 
‘‘(A) the date on which the original return 
which includes the calendar quarter with respect 
to which such credit is determined is filed, 
‘‘(B) the date on which such return is treat-
ed as filed under section 6501(b)(2), or 
‘‘(C) the date on which the claim for credit 
or refund with respect to such credit is made. 
‘‘(2) DEDUCTION FOR WAGES TAKEN INTO AC-
COUNT IN DETERMINING IMPROPERLY CLAIMED CRED-
IT.— 
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 6511, in the case of an assessment attrib-
utable to a credit claimed under this section, the 
limitation on the time period for credit or refund 
of any amount attributable to a deduction for 
improperly claimed ERTC wages shall not ex-
pire before the time period for such assessment 
expires under paragraph (1). 
‘‘(B) IMPROPERLY CLAIMED ERTC WAGES.— 
For purposes of this paragraph, the term ‘im-
properly claimed ERTC wages’ means, with re-
spect to an assessment attributable to a credit 
claimed under this section, the wages with re-
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† HR 1 EAS 
spect to which a deduction would not have been 
allowed if the portion of the credit to which such 
assessment relates had been properly claimed.’’. 
(f) AMENDMENT TO PENALTY FOR ERRONEOUS CLAIM 
FOR REFUND OR CREDIT.—Section 6676(a) is amended by 
striking ‘‘income tax’’ and inserting ‘‘income or employ-
ment tax’’. 
(g) EFFECTIVE DATES.— 
(1) IN GENERAL.—The provisions of this section 
shall apply to aid, assistance, and advice provided 
after the date of the enactment of this Act. 
(2) LIMITATION ON CREDITS AND REFUNDS.— 
Subsection (d) shall apply to credits and refunds al-
lowed or made after the date of the enactment of this 
Act. 
(3) EXTENSION
OF
LIMITATION
ON
ASSESS-
MENT.—The amendment made by subsection (e) shall 
apply to assessments made after the date of the enact-
ment of this Act. 
(4) AMENDMENT TO PENALTY FOR ERRONEOUS 
CLAIM
FOR
REFUND
OR
CREDIT.—The amendment 
made by subsection (f) shall apply to claims for credit 
or refund after the date of the enactment of this Act. 
(h) REGULATIONS.—The Secretary (as defined in sub-
section (a)(5)) shall issue such regulations or other guidance
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† HR 1 EAS 
as may be necessary or appropriate to carry out the pur-
poses of this section (and the amendments made by this sec-
tion). 
SEC. 70606. SOCIAL SECURITY NUMBER REQUIREMENT FOR 
AMERICAN 
OPPORTUNITY 
AND 
LIFETIME 
LEARNING CREDITS. 
(a) SOCIAL SECURITY NUMBER OF TAXPAYER RE-
QUIRED.—Section 25A(g)(1) is amended to read as follows: 
‘‘(1) IDENTIFICATION REQUIREMENT.— 
‘‘(A) SOCIAL SECURITY NUMBER REQUIRE-
MENT.—No credit shall be allowed under sub-
section (a) to an individual unless the indi-
vidual includes on the return of tax for the tax-
able year— 
‘‘(i) such individual’s social security 
number, and 
‘‘(ii) in the case of a credit with re-
spect to the qualified tuition and related ex-
penses of an individual other than the tax-
payer or the taxpayer’s spouse, the name 
and social security number of such indi-
vidual. 
‘‘(B) INSTITUTION.—No American Oppor-
tunity Tax Credit shall be allowed under this 
section unless the taxpayer includes the employer
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† HR 1 EAS 
identification number of any institution to 
which the taxpayer paid qualified tuition and 
related expenses taken into account under this 
section on the return of tax for the taxable year. 
‘‘(C) 
SOCIAL
SECURITY
NUMBER
DE-
FINED.—For purposes of this paragraph, the 
term ‘social security number’ shall have the 
meaning given such term in section 24(h)(7).’’. 
(b) OMISSION TREATED AS MATHEMATICAL OR CLER-
ICAL ERROR.—Section 6213(g)(2)(J) is amended by strik-
ing ‘‘TIN’’ and inserting ‘‘social security number or em-
ployer identification number’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2025. 
SEC. 70607. TASK FORCE ON THE REPLACEMENT OF DIRECT 
FILE. 
Out of any money in the Treasury not otherwise ap-
propriated, there is hereby appropriated for the fiscal year 
ending September 30, 2026, $15,000,000, to remain avail-
able until September 30, 2026, for necessary expenses of the 
Department of the Treasury to deliver to Congress, within 
90 days following the date of the enactment of this Act, a 
report on—
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† HR 1 EAS 
(1) the cost of enhancing and establishing public- 
private partnerships which provide for free tax filing 
for up to 70 percent of all taxpayers calculated by ad-
justed gross income, and to replace any direct e-file 
programs run by the Internal Revenue Service; 
(2) taxpayer opinions and preferences regarding 
a taxpayer-funded, government-run service or a free 
service provided by the private sector; 
(3) assessment of the feasibility of a new ap-
proach, how to make the options consistent and sim-
ple for taxpayers across all participating providers, 
and how to provide features to address taxpayer 
needs; and 
(4) the cost (including options for differential 
coverage based on taxpayer adjusted gross income and 
return complexity) of developing and running a free 
direct e-file tax return system, including costs to 
build and administer each release.
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† HR 1 EAS 
Subtitle B—Health 
CHAPTER 1—MEDICAID 
Subchapter A—Reducing Fraud and 
Improving Enrollment Processes 
SEC. 71101. MORATORIUM ON IMPLEMENTATION OF RULE 
RELATING TO ELIGIBILITY AND ENROLLMENT 
IN MEDICARE SAVINGS PROGRAMS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall not, during the period beginning on 
the date of the enactment of this section and ending Sep-
tember 30, 2034, implement, administer, or enforce the 
amendments made by the provisions of the final rule pub-
lished by the Centers for Medicare & Medicaid Services on 
September 21, 2023, and titled ‘‘Streamlining Medicaid; 
Medicare Savings Program Eligibility Determination and 
Enrollment’’ (88 Fed. Reg. 65230) to the following sections 
of title 42, Code of Federal Regulations: 
(1) Section 406.21(c). 
(2) Section 435.4. 
(3) Section 435.601. 
(4) Section 435.911. 
(5) Section 435.952. 
(b) IMPLEMENTATION FUNDING.—For the purposes of 
carrying out the provisions of this section and section 
71102, there are appropriated, out of any monies in the
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† HR 1 EAS 
Treasury not otherwise appropriated, to the Administrator 
of the Centers for Medicare & Medicaid Services, $1,000,000 
for fiscal year 2026, to remain available until expended. 
SEC. 71102. MORATORIUM ON IMPLEMENTATION OF RULE 
RELATING TO ELIGIBILITY AND ENROLLMENT 
FOR 
MEDICAID, 
CHIP, 
AND 
THE 
BASIC 
HEALTH PROGRAM. 
The Secretary of Health and Human Services shall 
not, during the period beginning on the date of the enact-
ment of this section and ending September 30, 2034, imple-
ment, administer, or enforce the amendments made by the 
provisions of the final rule published by the Centers for 
Medicare & Medicaid Services on April 2, 2024, and titled 
‘‘Medicaid Program; Streamlining the Medicaid, Children’s 
Health Insurance Program, and Basic Health Program Ap-
plication, Eligibility Determination, Enrollment, and Re-
newal Processes’’ (89 Fed. Reg. 22780) to the following sec-
tions of title 42, Code of Federal Regulations: 
(1) PART 431.— 
(A) Section 431.213(d). 
(2) PART 435.— 
(A) Section 435.222. 
(B) Section 435.407. 
(C) Section 435.907. 
(D) Section 435.911(c).
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† HR 1 EAS 
(E) Section 435.912. 
(F) Section 435.916. 
(G) Section 435.919. 
(H) Section 435.1200(b)(3)(i)-(v). 
(I) Section 435.1200(e )(1)(ii). 
(J) Section 435.1200(h)(1). 
(3) PART 447.—Section 447.56(a)(1)(v). 
(4) PART 457.— 
(A) Section 457.344. 
(B) Section 457.960. 
(C) Section 457.1140(d)(4). 
(D) Section 457.1170. 
(E) Section 457.1180. 
SEC. 71103. REDUCING DUPLICATE ENROLLMENT UNDER 
THE MEDICAID AND CHIP PROGRAMS. 
(a) MEDICAID.— 
(1) IN GENERAL.—Section 1902 of the Social Se-
curity Act (42 U.S.C. 1396a) is amended— 
(A) in subsection (a)— 
(i) in paragraph (86), by striking 
‘‘and’’ at the end; 
(ii) in paragraph (87), by striking the 
period and inserting ‘‘; and’’; and 
(iii) by inserting after paragraph (87) 
the following new paragraph:
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† HR 1 EAS 
‘‘(88) provide— 
‘‘(A) beginning not later than January 1, 
2027, in the case of 1 of the 50 States and the 
District of Columbia, for a process to regularly 
obtain address information for individuals en-
rolled under such plan (or a waiver of such 
plan) in accordance with subsection (vv); and 
‘‘(B) beginning not later than October 1, 
2029— 
‘‘(i) for the State to submit to the sys-
tem established by the Secretary under sub-
section (uu), with respect to an individual 
enrolled or seeking to enroll under such 
plan, not less frequently than once each 
month and during each determination or 
redetermination of the eligibility of such in-
dividual for medical assistance under such 
plan (or waiver of such plan)— 
‘‘(I) the social security number of 
such individual, if such individual has 
a social security number and is re-
quired to provide such number to en-
roll under such plan (or waiver); and 
‘‘(II) such other information with 
respect to such individual as deter-
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† HR 1 EAS 
mined necessary by the Secretary for 
purposes of preventing individuals 
from simultaneously being enrolled 
under State plans (or waivers of such 
plans) of multiple States; 
‘‘(ii) for the use of such system to pre-
vent such simultaneous enrollment; and 
‘‘(iii) in the case that such system in-
dicates that an individual enrolled or seek-
ing to enroll under such plan (or waiver of 
such plan) is enrolled under a State plan 
(or waiver of such a plan) of another State, 
for the taking of appropriate action (as de-
termined by the Secretary) to identify 
whether such an individual resides in the 
State and disenroll an individual from the 
State plan of such State if such individual 
does not reside in such State (unless such 
individual meets such an exception as the 
Secretary may specify).’’; and 
(B) by adding at the end the following new 
subsections: 
‘‘(uu) PREVENTION OF ENROLLMENT UNDER MUL-
TIPLE STATE PLANS.—
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† HR 1 EAS 
‘‘(1) IN GENERAL.—Not later than October 1, 
2029, the Secretary shall establish a system to be uti-
lized by the Secretary and States to prevent an indi-
vidual from being simultaneously enrolled under the 
State plans (or waivers of such plans) of multiple 
States. Such system shall— 
‘‘(A) provide for the receipt of information 
submitted 
by 
a 
State 
under 
subsection 
(a)(88)(B)(i); and 
‘‘(B) not less than once each month, trans-
mit information to a State (or allow the Sec-
retary to transmit information to a State) re-
garding whether an individual enrolled or seek-
ing to enroll under the State plan of such State 
(or waiver of such plan) is enrolled under the 
State plan (or waiver of such plan) of another 
State. 
‘‘(2) STANDARDS.—The Secretary shall establish 
such standards as determined necessary by the Sec-
retary to limit and protect information submitted 
under such system and ensure the privacy of such in-
formation, consistent with subsection (a)(7). 
‘‘(3) IMPLEMENTATION FUNDING.—There are ap-
propriated to the Administrator of the Centers for 
Medicare & Medicaid Services, out of amounts in the
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† HR 1 EAS 
Treasury not otherwise appropriated, in addition to 
amounts otherwise available— 
‘‘(A) for fiscal year 2026, $10,000,000 for 
purposes of establishing the system and stand-
ards required under this subsection, to remain 
available until expended; and 
‘‘(B) for fiscal year 2029, $20,000,000 for 
purposes of maintaining such system, to remain 
available until expended. 
‘‘(vv) PROCESS TO OBTAIN ENROLLEE ADDRESS IN-
FORMATION.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a)(88)(A), a process to regularly obtain address in-
formation for individuals enrolled under a State plan 
(or a waiver of such plan) shall obtain address infor-
mation from reliable data sources described in para-
graph (2) and take such actions as the Secretary shall 
specify with respect to any changes to such address 
based on such information. 
‘‘(2) RELIABLE
DATA
SOURCES
DESCRIBED.— 
For purposes of paragraph (1), the reliable data 
sources described in this paragraph are the following: 
‘‘(A) Mail returned to the State by the 
United States Postal Service with a forwarding 
address.
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† HR 1 EAS 
‘‘(B) The National Change of Address Data-
base maintained by the United States Postal 
Service. 
‘‘(C) A managed care entity (as defined in 
section 1932(a)(1)(B)) or prepaid inpatient 
health plan or prepaid ambulatory health plan 
(as 
such 
terms 
are 
defined 
in 
section 
1903(m)(9)(D)) that has a contract under the 
State plan if the address information is provided 
to such entity or plan directly from, or verified 
by such entity or plan directly with, such indi-
vidual. 
‘‘(D) Other data sources as identified by the 
State and approved by the Secretary.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) PARIS.—Section 1903(r)(3) of the So-
cial Security Act (42 U.S.C. 1396b(r)(3)) is 
amended— 
(i) by striking ‘‘In order’’ and insert-
ing ‘‘(A) In order’’; 
(ii) by striking ‘‘through the Public’’ 
and inserting ‘‘through— 
‘‘(i) the Public’’; 
(iii) by striking the period at the end 
and inserting ‘‘; and