Congress quietly expands tax credits for biobased chemical makers
H.R. 8137 — To amend the Internal Revenue Code of 1986 to establish tax credits for the production of, and investment in, certain renewable materials. · Filed by Michelle Fischbach (R-MN) · 10 cosponsors · Introduced Mar 27, 2026 · Referred to committee
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What it does
This bill creates two federal tax credits to encourage domestic production of renewable materials made from biomass (plants and agricultural waste). Companies that produce or invest in facilities making biobased chemicals, plastics, and materials can claim a 10-cent-per-pound production credit or a 30% investment credit for facility construction. The credits are capped at $10 million per facility per year and are available for 10 years after a facility opens, but exclude products suitable as fuel or food.
Why we flagged it
The bill establishes two tax incentives—a production credit (10 cents per pound) and an investment credit (30% of qualified investment)—to encourage domestic production of biobased materials. It is straightforward industrial policy, not commemorative or self-serving.
What the text implies
- The 10-cent-per-pound production credit is uncapped per facility ($10M annual limit applies only to the credit amount, not production volume), potentially creating significant long-term fiscal exposure if production scales rapidly.
- The 'first sale or use' rule prevents double-dipping in supply chains but may create disputes over which entity qualifies when biomass is processed through multiple stages.
The full analysis lists 5 implications of this text.
Who stands to gain
biochemical manufacturers; bioplastics producers; agricultural biomass processors