Companies that clear wildfire-prone forests and firms that store carbon would get a new federal tax credit for capturing and permanently locking away the carbon in wood waste left over from wildfire-prevention work. The credit, added to the tax code as Section 45BB, pays $36 for each metric ton of carbon dioxide stored deep underground in secure geological storage and $12 per ton stored in long-lasting products like biochar or durable building materials, with both amounts rising with inflation after 2026. Projects that meet federal wage and apprenticeship rules can earn five times those amounts. The credit applies only to wood from thinning small trees (8 inches or less across at chest height) and other residues such as limbs and bark taken from high wildfire-risk areas or ecological restoration work on federal lands, and it cannot be claimed when the captured carbon is used to pump more oil or gas out of the ground. Businesses can sell the credit to other taxpayers or receive it as a direct cash payment from the government. Before the credit takes effect, the Treasury Department must write sustainability rules covering soil, water, biodiversity, and food production, and set up independent third-party monitoring and verification, each with at least a 60-day public comment period and a review every five years. The credit would apply to tax years starting after December 31, 2025.
Corporate Benefits
- Forest-residue carbon-removal tax credit — New $36-per-ton credit created for storage projects
- Bonus credit multiplier — 5x credit for projects meeting wage and apprenticeship rules
- Credit transferability and direct pay — Credit made sellable to others or payable as cash
Environmental Concerns
- Carbon-removal subsidy — New credit for storing CO2 from forest biomass
- Wildfire hazard reduction incentive — Credit tied to thinning in high-risk firesheds
- Sustainability standards — Required rules protecting soil, water, biodiversity, and food supply
- Enhanced oil recovery eligibility — Credit barred when captured CO2 used to extract more oil or gas
Transparency & Accountability
- Monitoring and verification — Independent third-party verifiers required for carbon claims
- Public comment periods — At least 60 days required before final rules take effect
- Standards review cycle — Sustainability and accounting rules reconsidered every 5 years
- Credit recapture — Treasury must reclaim credit if stored carbon later escapes
Congressional Summary
Wildfire Reduction and Carbon Removal Act of 2025This bill establishes a new federal business tax credit for forest residue biomass carbon removal and storage.Specifically, the bill allows a tax credit for qualified carbon dioxide equivalent that is (1) captured from qualified forest residue biomass using biomass equipment placed in service at a qualified forest residue biomass carbon removal and storage project on or after the date the bill is enacted, and (2) stored in secure geological storage or via long-duration utilization. Qualified forest residue biomass is forest residue from the thinning of certain trees, limbs, and bark and produced from certain wildfire hazard reduction or ecological restoration activities. Sustainability standards apply.The tax credit amount is (1) $36 (adjusted for inflation) per metric ton of qualified carbon dioxide equivalent stored in secure geological storage, and (2) $12 (adjusted for inflation) per metric ton of qualified carbon dioxide equivalent stored via long-duration utilization. The tax credit is increased if certain wage and apprenticeship requirements are met.The bill limits the tax credit for existing removal and storage projects to the qualified captured carbon dioxide that generally is attributable to additional biomass equipment placed into service after the bill is enacted.The tax credit may be transferred to an unrelated third party, and certain tax-exempt and government entities may receive the tax credit as a payment.Finally, the bill requires the Internal Revenue Service to establish sustainability standards for the identification of qualified forest residue biomass and issue other regulations.
Details
- Congress
- 119th
- Chamber
- Senate
- Status
- summarized
- Action
- Introduced in Senate
- Action Date
- 2025-05-21
- Date Added
- 2026-07-16
- Source
- Congress.gov →
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