IRS Issues 2023 Carbon Capture and Sequestration Inflation Adjustment Factors

On June 26, 2023, IRS issued guidance setting the inflation adjustment factor for IRC section 45Q carbon capture and sequestration credits expanded by IRA section 13104. IRS set the inflation adjustment factor for calendar year 2023 at 1.3471. This makes the § 45Q credit for calendar year 2023 $26.94 per metric ton of qualified carbon oxide captured and geologically sequestered, and $13.47 per metric ton of qualified carbon oxide that is utilized, including through enhanced oil recovery. This is a 7.5% increase over 2022 levels.