H.R. 7821: Promoting Reduction of Emissions through Landscaping Equipment Act

This bill, known as the Promoting Reduction of Emissions through Landscaping Equipment Act, proposes changes to the Internal Revenue Code to encourage the use of zero-emission electric lawn, garden, and landscaping equipment. It focuses on establishing a tax credit for businesses that purchase such equipment. Below are the key provisions of the bill:

Tax Credit for Zero-Emission Equipment

The bill introduces a new tax credit that allows businesses to receive a credit of **40%** of the cost of eligible zero-emission electric lawn, garden, and landscape equipment that they place in service during a taxable year.

Eligibility and Limitations

There are several limitations on the tax credit:

• Annual Limitation: The maximum amount of credit a business can claim in a single year is capped at **$25,000**.
• Aggregate Limitation: Over a consecutive **10-year period**, the total amount of credits cannot exceed **$100,000**.

Definition of Eligible Equipment

The bill specifies that zero-emission electric lawn, garden, and landscape equipment includes:

• Equipment primarily used for landscaping that is powered by:
  • Electric motors drawing current from solar power, chargeable or replaceable batteries, fuel cells, or through electricity from the grid.
  • Alternative power sources that generate zero emissions as determined by the Secretary of Energy.
• Zero-emission generators used to charge such equipment.
• Batteries used to charge or operate the equipment, provided they are not included as part of the equipment itself.
• Property used to retrofit existing landscaping equipment to make it zero-emission compliant.

Product Identification and Compliance

For equipment placed in service after **December 31, 2025**, manufacturers must adhere to product identification requirements similar to other tax credits. This serves to ensure compliance and verification of eligibility for the tax credit.

Transfer and Payment of Credit

The bill provides provisions for:

• Elective Payment: Businesses may opt to receive the credit as a direct payment rather than a reduction in tax liability.
• Transfer: Businesses may transfer the credit to other entities, enhancing liquidity and accessibility to small businesses or start-ups.

Provisions Regarding Deductions and Bankruptcy

To prevent double-dipping, businesses cannot claim the credit for equipment that already received benefits under other tax provisions. However, if a business goes bankrupt or dissolves, there are exceptions to recapture based on specific circumstances outlined by the Secretary.

Termination of the Credit

The tax credit provisions will cease to apply to equipment placed in service after the date that is **five years** following the enactment of this legislation.

Effective Date

The changes proposed by this bill will apply to property placed in service after **December 31, 2024**.

Relevant Companies

• DE (Deere & Company) - Deere produces a variety of agricultural and landscaping equipment, and their offerings could shift significantly towards electric versions if this bill encourages market demand.
• RYI (Ryobi) - This brand offers battery-operated lawn and garden tools, likely positioning itself to benefit from increased sales of electric equipment under the new tax incentives.
• TTC (The Toro Company) - Toro manufactures lawn care and landscape maintenance equipment and might adapt its product lines to align with new regulations and consumer incentives.