I 
119TH CONGRESS 
1ST SESSION H. R. 6824 
To amend the Internal Revenue Code of 1986 to establish a tax credit 
for qualified combined heat and power system property, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 17, 2025 
Ms. VAN DUYNE (for herself and Mr. KUSTOFF) introduced the following bill; 
which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to establish 
a tax credit for qualified combined heat and power sys-
tem property, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. TAX CREDIT FOR QUALIFIED COMBINED HEAT 
AND POWER SYSTEM PROPERTY. 
(a) ESTABLISHMENT OF CREDIT.— 
(1) IN GENERAL.—Subpart E of part IV of 
subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by inserting after section 
48E the following new section: 
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‘‘SEC. 48F. CREDIT FOR QUALIFIED COMBINED HEAT AND 
POWER SYSTEM PROPERTY. 
‘‘(a) CREDIT FOR QUALIFIED COMBINED HEAT AND 
POWER SYSTEM PROPERTY.— 
‘‘(1) IN GENERAL.—For purposes of section 46, 
except as provided in subsection (c)(1)(B), the credit 
for qualified combined heat and power system prop-
erty for any taxable year is an amount equal to 10 
percent of the basis of each qualified combined heat 
and power system property placed in service during 
such taxable year. 
‘‘(2) COORDINATION
WITH
REHABILITATION 
CREDIT.—The percentage specified in paragraph (1) 
shall not apply to that portion of the basis of any 
property which is attributable to qualified rehabilita-
tion expenditures (as defined in section 47(c)(2)). 
‘‘(3) QUALIFIED COMBINED HEAT AND POWER 
SYSTEM PROPERTY.—For purposes of this section, 
the term ‘qualified combined heat and power system 
property’ means any property— 
‘‘(A) which is combined heat and power 
system property, 
‘‘(B)(i) the construction, reconstruction, or 
erection of which is completed by the taxpayer, 
or 
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‘‘(ii) which is acquired by the taxpayer if 
the original use of such property commences 
with the taxpayer, 
‘‘(C) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able, and 
‘‘(D) which meets the performance and 
quality standards (if any) which— 
‘‘(i) have been prescribed by the Sec-
retary by regulations (after consultation 
with the Secretary of Energy), and 
‘‘(ii) are in effect at the time of the 
acquisition of the property. 
Such term shall not include any property which 
is part of a facility the production from which 
is allowed as a credit under section 45 for the 
taxable year or any prior taxable year. 
‘‘(4) SPECIAL RULE FOR PROPERTY FINANCED 
BY TAX-EXEMPT BONDS.—Rules similar to the rule 
under section 45(b)(3) shall apply for purposes of 
this section. 
‘‘(5) DOMESTIC
CONTENT
BONUS
CREDIT 
AMOUNT.— 
‘‘(A) IN GENERAL.—In the case of any en-
ergy project which satisfies the requirement 
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under subparagraph (B), for purposes of apply-
ing paragraph (1) with respect to qualified com-
bined heat and power system property that is 
part of such project, the percentage specified in 
paragraph (1) shall be increased by 10 percent-
age points. 
‘‘(B) REQUIREMENT.—Rules similar to the 
rules of section 45(b)(9)(B) shall apply. 
‘‘(6) INCREASE IN CREDIT RATE FOR ENERGY 
COMMUNITIES.—In the case of any energy project 
that is placed in service within an energy community 
(as defined in section 45(b)(11)(B), as applied by 
substituting ‘energy project’ for ‘qualified facility’ 
each place it appears), for purposes of applying 
paragraph (1) with respect to qualified combined 
heat and power system property which is part of 
such project, the percentage specified in paragraph 
(1) shall be increased by 10 percentage points. 
‘‘(7) REGULATIONS AND GUIDANCE.—The Sec-
retary shall issue such regulations or other guidance 
as the Secretary determines necessary to carry out 
the purposes of this subsection, including regulations 
or other guidance which provides for requirements 
for recordkeeping or information reporting for pur-
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poses of administering the requirements of this sub-
section. 
‘‘(b) CERTAIN
PROGRESS
EXPENDITURE
RULES 
MADE APPLICABLE.—Rules similar to the rules of sub-
sections (c)(4) and (d) of section 46 (as in effect on the 
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990) shall apply for purposes of sub-
section (a). 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) COMBINED
HEAT
AND
POWER
SYSTEM 
PROPERTY.— 
‘‘(A) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The term ‘combined heat and 
power system property’ means property com-
prising a system— 
‘‘(i) which uses the same energy 
source for the simultaneous or sequential 
generation of electrical power, mechanical 
shaft power, or both, in combination with 
the generation of steam or other forms of 
useful thermal energy (including heating 
and cooling applications), 
‘‘(ii) which produces— 
‘‘(I) at least 20 percent of its 
total useful energy in the form of 
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thermal energy which is not used to 
produce electrical or mechanical power 
(or combination thereof), and 
‘‘(II) at least 20 percent of its 
total useful energy in the form of elec-
trical or mechanical power (or com-
bination thereof), 
‘‘(iii) the energy efficiency percentage 
of which exceeds 60 percent, and 
‘‘(iv) the construction of which begins 
on or after January 1, 2025. 
‘‘(B) LIMITATION.— 
‘‘(i) IN
GENERAL.—In the case of 
combined heat and power system property 
with an electrical capacity in excess of the 
applicable capacity placed in service during 
the taxable year, the credit under sub-
section (a)(1) (determined without regard 
to this paragraph) for such year shall be 
equal to the amount which bears the same 
ratio to such credit as the applicable ca-
pacity bears to the capacity of such prop-
erty. 
‘‘(ii) 
APPLICABLE
CAPACITY.—For 
purposes of clause (i), the term ‘applicable 
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capacity’ means 25 megawatts or a me-
chanical energy capacity of more than 
33,500 horsepower, or an equivalent com-
bination of electrical and mechanical en-
ergy capacities. 
‘‘(iii) MAXIMUM CAPACITY.—The term 
‘combined heat and power system property’ 
shall not include any property comprising a 
system if such system has a capacity in ex-
cess of 50 megawatts or a mechanical en-
ergy capacity in excess of 67,000 horse-
power, or an equivalent combination of 
electrical and mechanical energy capacities. 
‘‘(iv) CLARIFICATION REGARDING CA-
PACITY
DETERMINATIONS.—For purposes 
of this subparagraph, the determination of 
the electrical or mechanical energy capacity 
of any system shall be based on the normal 
operating rates of such system. 
‘‘(C) SPECIAL RULES.— 
‘‘(i) ENERGY
EFFICIENCY
PERCENT-
AGE.—For purposes of this paragraph, the 
energy efficiency percentage of a system is 
the fraction— 
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‘‘(I) the numerator of which is 
the total useful electrical, thermal, 
and mechanical power produced by 
the system at normal operating rates, 
and expected to be consumed in its 
normal application, and 
‘‘(II) the denominator of which is 
the lower heating value of the fuel 
sources for the system. 
‘‘(ii) DETERMINATIONS MADE ON BTU 
BASIS.—The energy efficiency percentage 
and the percentages under subparagraph 
(A)(ii) shall be determined on a Btu basis. 
‘‘(iii) INPUT AND OUTPUT PROPERTY 
NOT INCLUDED.—The term ‘combined heat 
and power system property’ does not in-
clude property used to transport the en-
ergy source to the facility or to distribute 
energy produced by the facility. 
‘‘(D) SYSTEMS USING BIOMASS.—If a sys-
tem is designed to use biomass (within the 
meaning of paragraphs (2) and (3) of section 
45(c) without regard to the last sentence of 
paragraph (3)(A)) for at least 90 percent of the 
energy source— 
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‘‘(i) subparagraph (A)(iii) shall not 
apply, but 
‘‘(ii) the amount of credit determined 
under subsection (a) with respect to such 
system shall not exceed the amount which 
bears the same ratio to such amount of 
credit (determined without regard to this 
subparagraph) as the energy efficiency per-
centage of such system bears to 60 per-
cent. 
‘‘(2) ENERGY
PROJECT.—The term ‘energy 
project’ means a project consisting of one or more 
qualified combined heat and power system properties 
that are part of a single project.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart E of part IV of subchapter A of 
chapter 1 of such Code is amended by inserting 
after the item relating to section 48E the following 
new item: 
‘‘48F. Credit for qualified combined heat and power system property.’’. 
(b) COORDINATION WITH ENERGY CREDIT.—Section 
48(c)(3)(B) of such Code is amended by adding at the 
end the following new clause: 
‘‘(iv) CLARIFICATION REGARDING CA-
PACITY
DETERMINATIONS.—For purposes 
of this subparagraph, the determination of 
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the electrical or mechanical energy capacity 
of any system shall be based on the normal 
operating rates of such system.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(4)(B)(x) of such Code is 
amended by inserting ‘‘or the credit for qualified 
combined heat and power system property deter-
mined under section 48F’’ after ‘‘section 48’’. 
(2) Section 45L(f) of such Code is amended by 
striking ‘‘47 or 48(a)’’ and inserting ‘‘47, 48(a), or 
48F(a)’’. 
(3) Section 46 of such Code is amended by 
striking ‘‘and’’ at the end of paragraph (6), by strik-
ing the period at the end of paragraph (7) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(8) the credit for qualified combined heat and 
power system property.’’. 
(4) Section 48C(f) of such Code is amended by 
inserting ‘‘48F,’’ after ‘‘48E,’’. 
(5) Section 50(a)(2)(E) of such Code is amend-
ed by striking ‘‘or 48E(e)’’ and inserting ‘‘48E(e), 
or 48F(b)’’. 
(6) Section 59A(b)(3)(C) of such Code is 
amended by inserting ‘‘or the credit for qualified 
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combined heat and power system property deter-
mined under section 48F’’ after ‘‘section 48’’. 
(d) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to property the construction 
of which begins after December 31, 2024. 
(2) COORDINATION WITH ENERGY CREDIT.— 
(A) IN GENERAL.—The amendment made 
by subsection (b) shall apply to property— 
(i) the construction of which begins 
before January 1, 2025, and 
(ii) which is placed in service during 
taxable years beginning after December 
31, 2024. 
(B) NO
INFERENCE.—The amendment 
made by subsection (b) shall not be construed 
to create any inference with respect to the prop-
er application of section 48(c)(3)(B) of the In-
ternal Revenue Code of 1986 with respect to 
taxable years beginning before January 1, 
2025. 
Æ 
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