Treasury Broadens 45Q Carbon Capture Safe Harbor via Notice 2026-50
IRS Notice 2026-50 extends and expands the Section 45Q safe harbor for secure geological storage, including enhanced oil and gas recovery projects, until further guidance is issued.
On August 14, 2026, Treasury and the IRS released Notice 2026-50, meaningfully broadening the interim Section 45Q carbon capture safe harbor first introduced in Notice 2026-1. The expansion responds to EPA's September 2025 proposed rule removing Subpart RR reporting obligations and to EPA's February 2026 final rule delaying 2025 Annual Report submissions until October 30, 2026. Notice 2026-50 now extends the safe harbor to qualified carbon oxide used as a tertiary injectant in enhanced oil or natural gas recovery projects and confirms reliance is permitted to determine recapture amounts under Treas. Reg. Section 1.45Q-5(a) and (c). The relief also extends beyond calendar year 2025, applying for each reporting year in which EPA fails to launch its e-GGRT system by March 31 of the following year, and remains available until Treasury and the IRS publish further interim guidance or proposed regulations. Sophisticated counsel advising CCS developers, oil and gas operators with EOR/EGR projects, and energy-transition investors should review compliance steps: secure geological storage under Subpart RR as in effect on December 31, 2025, possession of an EPA-approved MRV plan, and certification of the Annual Report by an independent engineer or geologist. Watch for forthcoming proposed regulations that could modify or narrow the safe harbor.