Section 45Q (Carbon Oxide Sequestration Credit): Section 45Q is a federal tax credit that generally rewards the capture of qualified carbon oxide (including carbon dioxide and certain other carbon oxides) and its disposal in secure geological storage, use as a tertiary injectant in qualified enhanced oil or natural gas recovery (with secure storage), or utilization under qualifying rules. The credit is typically claimed by filing IRS Form 8933 with the annual return. This page explains §45Q at a practical, high level and how it connects to transferability under IRC §6418.

In short (60 seconds)

  • What it is: §45Q is a per-metric-ton credit tied to “qualified carbon oxide” captured and then disposed, injected (with secure storage), or utilized under qualifying rules.
  • Three pathways: (1) secure geological storage, (2) EOR/tertiary injectant with secure storage, or (3) utilization (with additional requirements).
  • Minimum capture thresholds: IRS guidance describes different annual minimum capture thresholds for DAC facilities, electricity generating facilities, and other facilities (high level).
  • How it’s claimed: Typically computed on IRS Form 8933, and recent instructions include pre-filing registration notes for payment or transfer elections.
  • Monetization: IRS guidance describes §45Q as eligible for direct payment or transfer, subject to the rules.

Related pages

  • Eligible Credits — directory of credits eligible for §6418 transferability.
  • How It Works — transferability workflow, cash rule, timing (high level).
  • Registration Filing — pre-filing registration and registration numbers (high level).
  • Risk Compliance — diligence, excessive transfer concept, and risk basics.
  • Glossary — key terms and definitions.

1) What is the Section 45Q credit?

In plain terms, §45Q is designed to incentivize carbon capture, utilization, and storage (CCUS). IRS guidance describes the credit as applying to qualified carbon oxide captured at a qualified facility using carbon capture equipment and then disposed of in secure geological storage, used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project (with secure storage), or utilized for qualifying purposes.

Three qualifying pathways (high level)

  1. Secure geological storage (disposal into secure geological storage).
  2. Enhanced oil or natural gas recovery (EOR) as a tertiary injectant, with secure geological storage.
  3. Utilization (subject to additional requirements, including lifecycle analysis concepts in guidance).

2) Qualified carbon oxide (what counts?)

The statute and IRS guidance describe “qualified carbon oxide” as carbon oxide that is captured and handled under the qualifying pathways. In practice, the credit is computed per metric ton and relies on measurement and verification concepts.

Measurement and verification (why documentation matters)

Because §45Q is calculated per metric ton, documentation and measurement/verification are core diligence items. IRS Form 8933 and its instructions include detailed reporting concepts, and additional rules can apply depending on the pathway (storage vs utilization). If you’re building a diligence file, see Risk Compliance.

3) Qualified facilities and minimum capture thresholds (high level)

IRS guidance describes a “qualified facility” as an industrial facility or a direct air capture (DAC) facility that meets specified rules, including construction timing rules, and it provides annual minimum capture thresholds that differ by facility type.

Threshold examples stated in IRS guidance (high level)

  • Direct air capture (DAC) facility: IRS guidance describes a 1,000 metric ton annual minimum threshold.
  • Electricity generating facility: IRS guidance describes a higher annual minimum threshold and additional design/capture-capacity concepts.
  • Other facilities: IRS guidance describes a general annual minimum threshold for non-electric generating facilities.

These thresholds are summarized in official IRS guidance; always verify the specific tax-year requirements in the official sources.

4) Credit amounts (high level, time-sensitive)

§45Q credit amounts are time-sensitive, may be adjusted for inflation, and can differ by pathway (storage vs EOR vs utilization) and facility/equipment timing. The IRS provides a public summary of applicable dollar amounts and multipliers, and Form 8933 instructions provide year-specific details.

Two safe ways to stay accurate

  1. Use the IRS overview page for current-year summary amounts and eligibility concepts.
  2. Use Instructions for Form 8933 for year-specific credit rate and reporting details, including inflation adjustments and special rules.

Prevailing wage & apprenticeship (PWA) concept (high level)

IRS materials and Form 8933 instructions describe that meeting prevailing wage and apprenticeship requirements can affect the credit amount and that separate reporting (including Form 7220 in certain situations) may be required. Treat this as a high-level pointer and verify the applicable tax-year instructions.

5) How §45Q is claimed (Form 8933 and reporting)

IRS guidance states taxpayers generally claim the §45Q credit by completing Form 8933 and filing it with the taxpayer’s annual return. Instructions for Form 8933 provide details on what information is reported (facility, equipment, amount captured, pathway type, and elections).

Pre-filing registration note (payment or transfer elections)

Form 8933 instructions include reminders that the IRS has established a pre-filing registration process to elect payment or transfer of the credit. For the general workflow and what “pre-filing registration” means in practice, see Registration Filing.

6) §45Q and transferability under §6418 (what can be transferred?)

The IRS lists §45Q as an eligible credit that may be transferred under §6418, and Treasury/IRS final transferability regulations provide rules for the election. In general, §6418 transfers must be to an unrelated transferee and consideration must be paid in cash (high level).

Transferability checklist for §45Q (high level)

  • Confirm the credit amount: Ensure the credit is properly determined for the tax year and for the relevant facility/equipment.
  • Pre-filing registration: Plan early for registration and registration numbers where required for payment/transfer elections.
  • Cash consideration: Transfers under §6418 require cash payment as consideration (high level).
  • Documentation: Capture measurement/verification, pathway qualification, and contracts are typical diligence focus areas.
  • Risk awareness: Buyer risk can exist if credits are later challenged; see Risk Compliance.

Read next: How It Works and Registration Filing.

7) §45Q “direct pay” note (elective pay context)

IRS materials describe §45Q as eligible for direct payment (elective pay) or transfer, depending on taxpayer type and elections. This site focuses on transferability; for broader context and definitions (eligible taxpayer vs applicable entity), use How It Works and the IRS transferability FAQs listed below.

FAQs (Section 45Q)

1) What activities does §45Q generally reward?

Capturing qualified carbon oxide at a qualified facility and disposing of it in secure geological storage, using it as a tertiary injectant in EOR with secure storage, or utilizing it under qualifying rules.

2) How is the credit generally measured?

As a per-metric-ton credit, based on qualified carbon oxide captured and handled through a qualifying pathway, using measurement and verification concepts.

3) What form is used to claim §45Q?

IRS guidance indicates Form 8933 is used to claim the carbon oxide sequestration credit.

4) Can §45Q be transferred under §6418?

Yes. The IRS lists §45Q among eligible credits that may be transferred under §6418 (subject to the rules).

5) Is this page tax or legal advice?

No. This site provides general informational and educational content only. See Disclaimer.

Official sources (clickable)

This page is educational. For official definitions, eligibility rules, credit rates, and reporting requirements, consult the sources below.

Last updated: February 2026

Note: Educational content only — not tax or legal advice. See Disclaimer.