A bill 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.

Key Points

• Congress would create a tax credit equal to 10% of the cost of certain combined heat and power systems put into service.
• The credit could be larger (an extra 10 percentage points) if the project meets “domestic content” rules or is located in an “energy community.”
• To qualify, the system must meet efficiency and output rules (it must produce both useful heat and useful power) and construction must begin on or after January 1, 2025.
• Very large systems would face limits: credit phases down above 25 megawatts and systems above 50 megawatts would not qualify.
• This mainly affects businesses, factories, hospitals, and campuses that might install these systems; it could lower their tax bills and encourage on-site energy upgrades.