A step-by-step guide to the 45Q carbon sequestration credit — who qualifies, how amounts are calculated, and what documentation you need to file.
May 13, 2026
The 45Q tax credit pays businesses real money for capturing and storing carbon dioxide. Yet most small and mid-sized facilities have never modeled what it could mean for their bottom line. Here's the complete picture.
Section 45Q of the tax code is a per-metric-ton tax credit for carbon oxide sequestration. The Inflation Reduction Act dramatically expanded it — the current rate is $85 per metric ton for carbon dioxide that is permanently geologically stored, and $60 per metric ton for carbon dioxide that is utilized in qualifying industrial processes.
Unlike many incentives that are one-time credits on capital investments, 45Q is an ongoing credit tied to your annual carbon capture volume. Every year your system operates and captures carbon, you earn the credit.
The credit is available to any facility that captures carbon dioxide from an industrial source and either stores it permanently underground or utilizes it in a qualifying process. The IRA lowered the capture threshold significantly — industrial facilities now need to capture just 12,500 metric tons per year to qualify, down from 100,000 metric tons under the previous rules.
For context, a mid-sized manufacturing facility with annual revenues of $10M to $50M can often reach the 12,500 metric ton threshold with a properly sized micro-DAC or point-source capture installation.
Micro-Direct Air Capture systems are specifically designed for facility-scale deployment. Unlike utility-scale DAC projects that require massive infrastructure, micro-DAC units can be installed at an existing facility and begin generating 45Q credits within months of commissioning.
The economics work like this: a micro-DAC unit capturing 15,000 metric tons per year generates $1.275 million in annual 45Q credits at the current $85 rate. Against a typical installed cost of $800,000 to $2 million for a commercial micro-DAC unit, the payback period ranges from eight months to under two years depending on your facility's carbon profile and financing structure.
The facility owner claims the 45Q credit on their federal tax return each year. The credit is calculated based on the verified metric tonnage of carbon captured and stored or utilized during the tax year. Third-party verification of capture volumes is required — this is handled by your system operator or an independent verifier.
One important consideration: the 45Q credit can be transferred or sold under the IRA's transferability provisions. If your facility doesn't have sufficient federal tax liability to fully use the credit, you can sell it to another taxpayer for cash. This makes 45Q valuable even for facilities with limited tax exposure.
45Q can be stacked with the 48C investment tax credit if your carbon capture equipment qualifies under both programs. It can also be combined with state-level carbon incentives and voluntary carbon market credits in some configurations. A properly structured incentive stack can significantly reduce or eliminate the net cost of a micro-DAC installation.
To access 45Q, you need a qualifying carbon capture system installed at your facility, a monitoring and verification plan approved by the IRS, and a storage or utilization pathway for the captured carbon. The CCS ROI Predictor can model your facility's projected 45Q revenue based on your energy profile and facility type — run it before making any capital commitment.