Wildfire Reduction and Carbon Removal Act of 2025

Wildfire Reduction and Carbon Removal Act of 2025

This 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.