Congress quietly kills carbon-capture tax credit to boost hardwood sales
S. 1964 — Solid American Hardwood Tax Credit Act · Filed by Cindy Hyde-Smith (R-MS) · Introduced Jun 5, 2025 · Referred to committee
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What it does
This bill creates a federal tax credit for homeowners who install wood products (flooring, paneling, cabinetry, window frames) made from U.S.-grown deciduous trees in their primary residences, framing it as a 'natural carbon sink' investment. It simultaneously terminates an existing tax credit for industrial carbon capture equipment, shifting federal tax incentives away from technological carbon removal and toward domestic hardwood consumption through 2035.
Why we flagged it
The bill's primary mechanism is a homeowner tax credit for U.S. hardwood products, but it is paired with termination of an unrelated industrial carbon-capture credit. The hardwood credit is the stated purpose; the carbon-capture termination appears to be a rider designed to redirect climate-policy incentives.
- Section 3 terminates the Section 45Q carbon capture equipment credit, unrelated to hardwood tax incentives and contradicting stated climate goals.
What the text implies
- The bill reframes hardwood as a 'natural carbon sink' without requiring independent verification of actual carbon sequestration or lifecycle emissions from harvesting and processing.
- Terminating the 45Q carbon-capture credit may slow deployment of direct-air-capture and point-source carbon removal technologies, which are complementary to forestry-based approaches.
The full analysis lists 5 implications of this text.
Who stands to gain
domestic hardwood producers and mills; home-improvement retailers and contractors; real-estate developers marketing 'green' renovations