45Q Safe Harbor: What Notice 2026-50 Changes for CCUS
On August 21, 2026 the Treasury Department and the IRS released Notice 2026-50, modifying and amplifying earlier interim guidance (Notice 2026-1) for the carbon oxide sequestration credit under Internal Revenue Code §45Q. The action is a direct response to the Environmental Protection Agency’s September 16, 2025 proposal to remove subpart RR of 40 CFR part 98 — the reporting standard many 45Q claimants have relied on to prove secure geological storage. The updated 45Q safe harbor keeps the credit workable while that regulatory picture is unsettled, and it extends coverage to categories of taxpayers that Notice 2026-1 did not reach.
At SW Accounting & Consulting Corp we work with Los Angeles businesses across the energy value chain — operators, investors, and tax-equity partners in carbon capture, utilization, and storage (CCUS). Here is what the notice actually changes, who benefits, what documentation you need to keep, and the deadlines to watch.
What did Notice 2026-50 change about the 45Q safe harbor? 📜
The notice broadens the earlier 45Q safe harbor and extends how long taxpayers can rely on it while EPA reconsiders subpart RR reporting.
Notice 2026-1 provided an initial safe harbor for demonstrating “secure geological storage” of qualified carbon oxide under IRC §45Q, limited to disposal (not enhanced-recovery injection) and confined to storage occurring in calendar year 2025. Notice 2026-50 explicitly modifies and amplifies that guidance in three ways:
- Coverage expanded to EOR: the safe harbor now applies to qualified carbon oxide used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project.
- Recapture measurement addressed: the notice sets a method for determining the amount of qualified carbon oxide subject to recapture under Treas. Reg. §1.45Q-5(a) and (c).
- Applicability date extended: the safe harbor now covers secure geological storage occurring on or after January 1, 2025 through December 31 of the calendar year in which Treasury and the IRS publish further interim guidance or proposed regulations addressing §45Q compliance.
Section 5 of the notice makes the effect on prior guidance explicit: Notice 2026-50 modifies and amplifies Notice 2026-1. It does not supersede it — the safe harbor framework carries forward, expanded.
Why did the IRS act now on the §45Q credit? 🏭
Because EPA proposed to remove subpart RR — the primary reporting standard that 45Q claimants had used to demonstrate secure geological storage.
On September 16, 2025 EPA published a proposal (90 F.R. 44591) to remove reporting obligations for the geological sequestration of carbon dioxide imposed under subpart RR of 40 CFR part 98 (the Greenhouse Gas Reporting Program). Subpart RR requires operators of Class VI Underground Injection Control (UIC) wells — and Class II wells that opted in through an EPA-approved Monitoring, Reporting, and Verification (MRV) plan — to prepare and submit annual reports on carbon dioxide injected for geological storage. Those reports have long been the backbone of secure-storage documentation for the §45Q credit.
Stakeholders raised three concrete problems with letting the credit hang on subpart RR while EPA reconsiders it:
- Taxpayers claiming §45Q for enhanced oil or gas recovery projects could not realistically transition to another reporting standard in time to claim the credit for 2025.
- Limiting the earlier safe harbor to storage occurring in 2025 created uncertainty for CCUS projects with multi-year investment horizons.
- Taxpayers needed a supported method to measure carbon oxide subject to recapture under Treas. Reg. §1.45Q-5.
Notice 2026-50 addresses each. Treasury and the IRS coordinated with the EPA Administrator, the Secretary of Energy, and the Secretary of the Interior before issuing the expanded safe harbor.
How does the 45Q safe harbor work if e-GGRT is unavailable? 🧪
If EPA does not launch its electronic reporting system (e-GGRT) by March 31 of the year after the reporting year, taxpayers may rely on the safe harbor to satisfy specified §45Q regulatory requirements.
Historically, EPA has opened e-GGRT — its electronic Greenhouse Gas Reporting Tool — in mid-February for a given reporting year, with subpart RR annual reports due by March 31 for emissions in the prior calendar year (40 CFR §98.3(b), §98.5(a)). The safe harbor is designed for the situation in which that system is not available on the ordinary timetable. If EPA does not launch e-GGRT by March 31 of the calendar year immediately following the relevant reporting year, taxpayers following the guidance in section 3.02 of Notice 2026-50 (as modified) may rely on the safe harbor to satisfy specified regulatory requirements in Treas. Reg. §§1.45Q-3(b)(1)(ii), 1.45Q-3(b)(2)(ii) or 1.45Q-2(h)(5)(iii), 1.45Q-3(d), and 1.45Q-5(a) and (c). The safe harbor does not apply if EPA launches e-GGRT for that reporting year on time.
Practically, that means taxpayers should still be prepared to file subpart RR reports if the system opens — the safe harbor is a fallback, not an election. The IRS also invites comments on whether the ISO’s 27914:2026 standard (published March 2026) for carbon dioxide capture, transportation, and geological storage should be recognized in place of subpart RR going forward.
When do taxpayers and stakeholders need to act? 📅
Comments on the notice are due by October 30, 2026, and taxpayers relying on the safe harbor need to align their 2025-return documentation now.
Two deadlines matter immediately:
- October 30, 2026 — written comments on Notice 2026-50 are requested by this date, though the IRS will consider comments filed later if that will not delay future guidance. The docket is IRS-2026-0728, submitted electronically through the Federal eRulemaking Portal or by mail to Internal Revenue Service, CC:PA:01:PR (Notice 2026-50), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
- Your next filing for the 2025 tax year — taxpayers claiming the §45Q credit for secure geological storage occurring on or after January 1, 2025 need to determine whether they are relying on subpart RR reports (if timely available) or on the Notice 2026-50 safe harbor, and to obtain the certification described in the notice before the return is filed.
Notice 2026-50 at a glance 📊
| Item | Before Notice 2026-50 | Under Notice 2026-50 |
|---|---|---|
| Storage covered | Secure geological disposal only | Adds qualified EOR tertiary-injection storage |
| Applicability period | Calendar year 2025 storage | On/after Jan 1, 2025 through Dec 31 of the year Treasury/IRS issue further guidance |
| Recapture measurement | Not addressed | Method under Treas. Reg. §1.45Q-5(a) and (c) |
| Trigger | Interim while EPA reconsiders subpart RR | e-GGRT not launched by March 31 for the relevant reporting year |
| Comment deadline | — | October 30, 2026 (docket IRS-2026-0728) |
What should a CCUS taxpayer or tax-equity partner do next? ✅
Check your storage documentation path, obtain the required certification before filing, and calendar the October 30 comment deadline if the ISO standard would affect your project.
Concrete actions to take before the next filing:
- Confirm eligibility. Verify the in-service date of your carbon capture equipment (before or after February 9, 2018 changes the credit rate and the 12-year window) and confirm the credit amount under §45Q(a) that applies to your storage or utilization pathway.
- Check the OBBBA overlays. Confirm the entity claiming the credit is not a specified foreign entity or a foreign-influenced entity within the §70522 rules, and confirm the correct post-July 4, 2025 credit amount if the equipment was placed in service after that date.
- Pick your storage evidence path. If subpart RR reporting is available on the ordinary timetable, use it. If e-GGRT is not launched by March 31 for the relevant reporting year, work through section 3.02 of the notice (as modified) and secure the certification before filing.
- Preserve documentation. Retain the certification and supporting records with the return package — the IRS is clear that reliance on the safe harbor requires the specific documentation Notice 2026-50 describes.
- File comments if the ISO standard matters to you. Comments on whether ISO 27914:2026 should be used in place of subpart RR are due by October 30, 2026 through regulations.gov (docket IRS-2026-0728).
📌 Key Takeaways
- Notice 2026-50 expands the 45Q safe harbor to include enhanced oil and gas recovery storage.
- The applicability period now runs from January 1, 2025 through the end of the year Treasury/IRS issue further guidance.
- The safe harbor kicks in when e-GGRT is not launched by March 31 for the relevant reporting year.
- A specific certification is required before the return is filed — it cannot be back-filled later.
- Written comments (docket IRS-2026-0728) are due by October 30, 2026.
Frequently Asked Questions ❓
Q. What is the 45Q safe harbor in Notice 2026-50?
It is IRS guidance letting taxpayers claiming the §45Q carbon oxide sequestration credit demonstrate secure geological storage without relying on EPA’s subpart RR annual report — used when EPA’s e-GGRT system is not launched by March 31 for the relevant reporting year. Notice 2026-50 modifies and amplifies the earlier Notice 2026-1 safe harbor.
Q. Does the safe harbor cover enhanced oil recovery projects?
Yes. Notice 2026-50 expressly expands the safe harbor to include qualified carbon oxide used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project — which Notice 2026-1 did not cover.
Q. How long can taxpayers rely on Notice 2026-50?
The safe harbor applies to secure geological storage occurring on or after January 1, 2025 and on or before December 31 of the calendar year in which Treasury and the IRS publish further interim guidance in the Internal Revenue Bulletin or proposed regulations in the Federal Register addressing §45Q secure geological storage.
Q. Why did the IRS issue the notice now?
The EPA proposed on September 16, 2025 (90 F.R. 44591) to remove subpart RR of 40 CFR part 98. Because §45Q claimants used subpart RR annual reports to document secure geological storage, Treasury and the IRS acted to keep the credit workable while EPA reconsiders the reporting standard.
Q. Does the safe harbor address recapture?
Yes. It sets a method for determining the amount of qualified carbon oxide subject to recapture under Treas. Reg. §1.45Q-5(a) and (c), which the earlier Notice 2026-1 did not address.
Q. When are comments on Notice 2026-50 due?
Written comments should be submitted by October 30, 2026, though the IRS will consider later comments if that will not delay future guidance. The docket number is IRS-2026-0728 on the Federal eRulemaking Portal, or paper comments may be mailed to Internal Revenue Service, CC:PA:01:PR (Notice 2026-50).
The §45Q rules are technical, the documentation is unforgiving, and the OBBBA changes to entity eligibility and credit amount landed on top. If you are running a CCUS project or investing in one and want an independent read on how Notice 2026-50 changes your position, contact SW Accounting & Consulting Corp. Primary sources: IRS Notice 2026-50, Notice 2026-1, Internal Revenue Code §45Q, 40 CFR part 98, and the Federal eRulemaking Portal (docket IRS-2026-0728).
