S. 1964: Solid American Hardwood Tax Credit Act

This bill, known as the Solid American Hardwood Tax Credit Act, proposes changes to the Internal Revenue Code to incentivize the use of natural carbon sinks. The key provisions are outlined below:

Modification of Energy Efficient Home Improvement Credit

The bill aims to enhance the existing energy efficient home improvement credit by including a new category for natural carbon sink expenditures. Specifically, it adds a provision that allows taxpayers to claim a tax credit for costs associated with implementing natural carbon sinks in their homes.

• Definition of Natural Carbon Sink Expenditures: These expenditures refer to the costs incurred by taxpayers for installing natural carbon sinks that are:
  • Located at the taxpayer's principal residence in the United States.
  • Have their original use commence with the taxpayer.
  • Are expected to remain in use for at least five years.
• Types of Natural Carbon Sinks: The term "natural carbon sink" includes:
  • Flooring
  • Paneling
  • Millwork
  • Cabinetry doors or cabinetry facing
  • Window or skylight frames

  These materials must be made from deciduous trees that are grown and processed within the United States.

Extension of Tax Credit Period

The bill extends the time frame for claiming the credit until December 31, 2035, allowing more individuals to benefit from these tax incentives over a longer period.

Termination of Increased Credit for Carbon Oxide Sequestration

Additionally, the bill proposes to end the increased tax credits related to carbon oxide sequestration for any carbon capture equipment whose construction begins after the enactment of this bill. This means that after the bill is passed, new projects related to carbon capture will not be able to benefit from the increased credit provisions previously available.

Effective Dates

The amendments introduced by this bill would take effect for property placed in service after the bill is enacted, indicating that any natural carbon sink installations eligible for the tax credit must occur after this point in time.

Relevant Companies

• WOOD - The Invesco MSCI Global Timber ETF, which invests in companies related to timber and wood products, may see changes in market interest if consumers increase their use of solid hardwood products due to tax incentives.
• LPX - Louisiana-Pacific Corporation, a leader in engineered wood products, could benefit from increased demand for its products utilized in home improvements related to natural carbon sinks.
• TMST - TimkenSteel Corporation, which supplies steel for construction, might experience a shift in demand dynamics as home renovations using natural materials gain traction.