26 U.S.C. § 38: General business credit

§ 1.38-1 Investment in certain depreciable property.

Cases: World Airways, Inc. v. Commissioner, 564 F.2d 886 (9th Cir. 1977); Hokanson v. Commissioner, 730 F.2d 1245 (9th Cir. 1984)

(a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—

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(1) the business credit carryforwards carried to such taxable year,

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(2) the amount of the current year business credit, plus

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(3) the business credit carrybacks carried to such taxable year.

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(b) Current year business credit For purposes of this subpart, the amount of the current year business credit is the sum of the following credits determined for the taxable year:

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(1) the investment credit determined under section 46,

Amended 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(A), substituted “section 46” for “section 46(a)”.

(2) the work opportunity credit determined under section 51(a),

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1201(e)(1), substituted “work opportunity credit” for “targeted jobs credit”.

(3) the alcohol fuels credit determined under section 40(a),

(4) the research credit determined under section 41(a),

Amended 1986, 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11511(b)(1), struck out “plus” at end.
1986 Pub. L. 99-514 Pub. L. 99–514, § 231(d)(1), added par. (4).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1171(b)(1), struck out former par. (4) which read as follows: “the employee stock ownership credit determined under section 41(a)”.

(5) the low-income housing credit determined under section 42(a),

Amended 1986, 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11611(b)(1), struck out “plus” at end.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11511(b)(1), substituted “, plus” for period at end.
1986 Pub. L. 99-514 Pub. L. 99–514, § 252(b)(1), added par. (5).

(6) the enhanced oil recovery credit under section 43(a),

Amended 1990, 1992

1992 Pub. L. 102-486 Pub. L. 102–486 struck out “plus” at end of par. (6), substituted “; plus” for period at end of par. (7), and added par. (8).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11611(b)(1), substituted “, plus” for period at end.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11511(b)(1), added par. (6).

(7) in the case of an eligible small business (as defined in section 44(b)), the disabled access credit determined under section 44(a),

Amended 1990, 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(a)(1), struck out “plus” at end.
1992 Pub. L. 102-486 Pub. L. 102–486 struck out “plus” at end of par. (6), substituted “; plus” for period at end of par. (7), and added par. (8).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11611(b)(1), added par. (7).

(8) the renewable electricity production credit under section 45(a),

Amended 1992, 1993, 2007

2007 Pub. L. 110-172 Pub. L. 110–172, § 11(a)(6)(A), struck out “and” at end.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13322(a), which directed amendment of par. (8) by striking “plus” at end, could not be executed because “plus” did not appear at end.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(a)(1), substituted “, and” for period at end.
1992 Pub. L. 102-486 Pub. L. 102–486 struck out “plus” at end of par. (6), substituted “; plus” for period at end of par. (7), and added par. (8).

(9) the empowerment zone employment credit determined under section 1396(a),

Amended 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13443(b)(1), struck out “plus” at end.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13322(a), substituted “, plus” for period at end.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(a)(1), added par. (9).

(10) the Indian employment credit as determined under section 45A(a),

Amended 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13443(b)(1), substituted “, plus” for period at end.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13322(a), added par. (10).

(11) the employer social security credit determined under section 45B(a),

Amended 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13443(b)(1), added par. (11).

(12) the orphan drug credit determined under section 45C(a),

Amended 1996, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 619(b), struck out “plus” at end.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1205(a)(2), added par. (12).

(13) the new markets tax credit determined under section 45D(a),

Amended 2000, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 619(b), substituted “, plus” for period at end.
2001 Pub. L. 107-16 Pub. L. 107–16, § 205(b)(1), struck out “plus” at end.
2000 Pub. L. 106-554 Pub. L. 106–554 added par. (13).

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(14) in the case of an eligible employer (as defined in section 45E(c)), the small employer pension plan startup cost credit determined under section 45E(a),

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 619(b), added par. (14).
2001 Pub. L. 107-16 Pub. L. 107–16, § 205(b)(1), substituted “, plus” for period at end.

(15) the employer-provided child care credit determined under section 45F(a),

Amended 2001, 2002

2002 Pub. L. 107-147 Pub. L. 107–147, § 411(d)(2), substituted “45F(a)” for “45F”.
2001 Pub. L. 107-16 Pub. L. 107–16, § 205(b)(1), added par. (15).

(16) the railroad track maintenance credit determined under section 45G(a),

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 245(c)(1), added par. (16).

(17) the biodiesel fuels credit determined under section 40A(a),

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 302(b), added par. (17).

(18) the low sulfur diesel fuel production credit determined under section 45H(a),

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 339(b), added par. (18).

(19) the marginal oil and gas well production credit determined under section 45I(a),

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 341(b), added par. (19).

(20) the distilled spirits credit determined under section 5011(a),

Amended 2005

2005 Pub. L. 109-59 Pub. L. 109–59, § 11126(b), added par. (20).

(21) the advanced nuclear power facility production credit determined under section 45J(a),

Amended 2005

2005 Pub. L. 109-58 Pub. L. 109–58, § 1306(b), as amended by Pub. L. 109–59, § 11151(d)(1), added par. (21).

(22) the nonconventional source production credit determined under section 45K(a),

Amended 2005

2005 Pub. L. 109-58 Pub. L. 109–58, § 1322(a)(2), added par. (22).

(23) the new energy efficient home credit determined under section 45L(a),

Amended 2005

2005 Pub. L. 109-58 Pub. L. 109–58, § 1332(b), added par. (23).

(24) the portion of the alternative motor vehicle credit to which section 30B(g)(1) applies,

Amended 2005, 2007, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), redesignated pars. (25) and (26) as (24) and (25), respectively, and struck out former par. (24) which read as follows: “the energy efficient appliance credit determined under section 45M(a),”.
2007 Pub. L. 110-172 Pub. L. 110–172, § 11(a)(6)(A), struck out “and” at end.
2005 Pub. L. 109-58 Pub. L. 109–58, § 1342(b)(1), which directed the striking out of “plus” at end, could not be executed because “plus” did not appear at end.
2005 Pub. L. 109-58 Pub. L. 109–58, § 1334(b), added par. (24).

(25) the portion of the alternative fuel vehicle refueling property credit to which section 30C(d)(1) applies,

Amended 2005, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), redesignated pars. (25) and (26) as (24) and (25), respectively, and struck out former par. (24) which read as follows: “the energy efficient appliance credit determined under section 45M(a),”.
2005 Pub. L. 109-58 Pub. L. 109–58, § 1341(b)(1), added par. (25).

(26) the mine rescue team training credit determined under section 45N(a),

Amended 2005, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (31) to (34) first as (30) to (33), and then as (26) to (29), respectively. Former par. (26) redesignated (25), and former pars. (27) to (29) redesignated (26) to (28), respectively, and then struck out.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (27) to (30) as (26) to (29), respectively, and then struck them out. Prior to amendment, these four pars. set out credits for the Hurricane Katrina housing credit determined under section 1400P(b), the Hurricane Katrina employee retention credit determined under section 1400R(a), the Hurricane Rita employee retention credit determined under section 1400R(b), and the Hurricane Wilma employee retention credit determined under section 1400R(c).
2005 Pub. L. 109-58 Pub. L. 109–58, § 1342(b)(1), added par. (26).

(27) in the case of an eligible agricultural business (as defined in section 45O(e)), the agricultural chemicals security credit determined under section 45O(a),

Amended 2005, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (31) to (34) first as (30) to (33), and then as (26) to (29), respectively. Former par. (26) redesignated (25), and former pars. (27) to (29) redesignated (26) to (28), respectively, and then struck out.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (27) to (30) as (26) to (29), respectively, and then struck them out. Prior to amendment, these four pars. set out credits for the Hurricane Katrina housing credit determined under section 1400P(b), the Hurricane Katrina employee retention credit determined under section 1400R(a), the Hurricane Rita employee retention credit determined under section 1400R(b), and the Hurricane Wilma employee retention credit determined under section 1400R(c).
2005 Pub. L. 109-135 Pub. L. 109–135, § 103(b)(1), added par. (27).

(28) the differential wage payment credit determined under section 45P(a),

Amended 2005, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (31) to (34) first as (30) to (33), and then as (26) to (29), respectively. Former par. (26) redesignated (25), and former pars. (27) to (29) redesignated (26) to (28), respectively, and then struck out.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (27) to (30) as (26) to (29), respectively, and then struck them out. Prior to amendment, these four pars. set out credits for the Hurricane Katrina housing credit determined under section 1400P(b), the Hurricane Katrina employee retention credit determined under section 1400R(a), the Hurricane Rita employee retention credit determined under section 1400R(b), and the Hurricane Wilma employee retention credit determined under section 1400R(c).
2005 Pub. L. 109-135 Pub. L. 109–135, § 201(b)(1), added pars. (28) to (30).

(29) the carbon dioxide sequestration credit determined under section 45Q(a),

Amended 2005, 2006, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (31) to (34) first as (30) to (33), and then as (26) to (29), respectively. Former par. (26) redesignated (25), and former pars. (27) to (29) redesignated (26) to (28), respectively, and then struck out.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (27) to (30) as (26) to (29), respectively, and then struck them out. Prior to amendment, these four pars. set out credits for the Hurricane Katrina housing credit determined under section 1400P(b), the Hurricane Katrina employee retention credit determined under section 1400R(a), the Hurricane Rita employee retention credit determined under section 1400R(b), and the Hurricane Wilma employee retention credit determined under section 1400R(c).
2006 Pub. L. 109-432 Pub. L. 109–432 struck out “and” at end of par. (29), substituted “, plus” for period at end of par. (30), and added par. (31).
2005 Pub. L. 109-135 Pub. L. 109–135, § 201(b)(1), added pars. (28) to (30).

(30) the portion of the new clean vehicle credit to which section 30D(c)(1) applies,

Amended 2005, 2006, 2007, 2018, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13401(i)(3), substituted “clean” for “qualified plug-in electric drive motor”.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (35) to (37) first as (34) to (36), and then as (30) to (32), respectively. Former par. (30) redesignated (29) and then struck out, and former pars. (31) and (32) first redesignated (30) and (31), then (26) and (27), respectively.
2007 Pub. L. 110-172 Pub. L. 110–172, § 11(a)(6)(C), inserted “plus” at end.
2007 Pub. L. 110-172 Pub. L. 110–172, § 11(a)(6)(B), struck out “plus” at end.
2006 Pub. L. 109-432 Pub. L. 109–432 struck out “and” at end of par. (29), substituted “, plus” for period at end of par. (30), and added par. (31).
2005 Pub. L. 109-135 Pub. L. 109–135, § 201(b)(1), added pars. (28) to (30).

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(31) the small employer health insurance credit determined under section 45R,

Amended 2006, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (35) to (37) first as (34) to (36), and then as (30) to (32), respectively. Former par. (30) redesignated (29) and then struck out, and former pars. (31) and (32) first redesignated (30) and (31), then (26) and (27), respectively.
2006 Pub. L. 109-432 Pub. L. 109–432 struck out “and” at end of par. (29), substituted “, plus” for period at end of par. (30), and added par. (31).

(32) in the case of an eligible employer (as defined in section 45S(c)), the paid family and medical leave credit determined under section 45S(a),

Amended 2008, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(2)(B), (6)(B)(i), redesignated pars. (35) to (37) first as (34) to (36), and then as (30) to (32), respectively. Former par. (30) redesignated (29) and then struck out, and former pars. (31) and (32) first redesignated (30) and (31), then (26) and (27), respectively.
2008 Pub. L. 110-246 Pub. L. 110–246, § 15343(b), added par. (32).

(33) in the case of an eligible employer (as defined in section 45T(c)), the retirement auto-enrollment credit determined under section 45T(a), plus

Amended 2008, 2018, 2019

2019 Pub. L. 116-94 Pub. L. 116–94 added par. (33).
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(8), (d)(2)(B), (6)(B)(i), inserted comma at end of par. (34) and subsequently redesignated pars. (33) to (37) first as (32) to (36), and then as (28) to (32), respectively.
2008 Pub. L. 110-245 Pub. L. 110–245 added par. (33).

(34) the zero-emission nuclear power production credit determined under section 45U(a).

Amended 2008, 2018, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13105(b)(1), added par. (34).
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(8), (d)(2)(B), (6)(B)(i), inserted comma at end of par. (34) and subsequently redesignated pars. (33) to (37) first as (32) to (36), and then as (28) to (32), respectively.
2008 Pub. L. 110-343 Pub. L. 110–343, § 115(b), added par. (34).

(35) the sustainable aviation fuel credit determined under section 40B,

Amended 2008, 2009, 2014, 2017, 2018, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13203(b), added par. (35).
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(8), (d)(2)(B), (6)(B)(i), inserted comma at end of par. (34) and subsequently redesignated pars. (33) to (37) first as (32) to (36), and then as (28) to (32), respectively.
2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(b), struck out “plus” at end of par. (35), substituted “, plus” for period at end of par. (36), and added par. (37).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(2)(B), inserted “plus” at end of par. (35), redesignated par. (37) as (36), and struck out former par. (36) which read as follows: “the portion of the qualified plug-in electric vehicle credit to which section 30(c)(1) applies, plus”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 209(f)(1), struck out “plus” at end of par. (35), added par. (36), and redesignated former par. (36) as (37). Amendment was executed to subsec. (b) as it appeared after amendment by Pub. L. 111–148, § 1421(b), to reflect the probable intent of Congress, despite amendment being effective as if included in the enactment of Pub. L. 111–5. See 2010 Amendment and Effective Date of 2014 Amendment notes below.
2009 Pub. L. 111-5 Pub. L. 111–5 substituted “30D(c)(1)” for “30D(d)(1)”.
2008 Pub. L. 110-343 Pub. L. 110–343, § 205(c), added par. (35).

(36) the clean hydrogen production credit determined under section 45V(a),

Amended 2010, 2014, 2017, 2018, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13204(a)(4)(A), added par. (36).
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(8), (d)(2)(B), (6)(B)(i), inserted comma at end of par. (34) and subsequently redesignated pars. (33) to (37) first as (32) to (36), and then as (28) to (32), respectively.
2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(b), struck out “plus” at end of par. (35), substituted “, plus” for period at end of par. (36), and added par. (37).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(2)(B), inserted “plus” at end of par. (35), redesignated par. (37) as (36), and struck out former par. (36) which read as follows: “the portion of the qualified plug-in electric vehicle credit to which section 30(c)(1) applies, plus”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 209(f)(1), struck out “plus” at end of par. (35), added par. (36), and redesignated former par. (36) as (37). Amendment was executed to subsec. (b) as it appeared after amendment by Pub. L. 111–148, § 1421(b), to reflect the probable intent of Congress, despite amendment being effective as if included in the enactment of Pub. L. 111–5. See 2010 Amendment and Effective Date of 2014 Amendment notes below.
2010 Pub. L. 111-148 Pub. L. 111–148, § 1421(b), added par. (36).

(37) the qualified commercial clean vehicle credit determined under section 45W,

Amended 2014, 2017, 2018, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13403(b)(1), added par. (37).
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(8), (d)(2)(B), (6)(B)(i), inserted comma at end of par. (34) and subsequently redesignated pars. (33) to (37) first as (32) to (36), and then as (28) to (32), respectively.
2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(b), struck out “plus” at end of par. (35), substituted “, plus” for period at end of par. (36), and added par. (37).
2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(2)(B), inserted “plus” at end of par. (35), redesignated par. (37) as (36), and struck out former par. (36) which read as follows: “the portion of the qualified plug-in electric vehicle credit to which section 30(c)(1) applies, plus”.
2014 Pub. L. 113-295 Pub. L. 113–295, § 209(f)(1), struck out “plus” at end of par. (35), added par. (36), and redesignated former par. (36) as (37). Amendment was executed to subsec. (b) as it appeared after amendment by Pub. L. 111–148, § 1421(b), to reflect the probable intent of Congress, despite amendment being effective as if included in the enactment of Pub. L. 111–5. See 2010 Amendment and Effective Date of 2014 Amendment notes below.

(38) the advanced manufacturing production credit determined under section 45X(a),

Amended 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13502(b)(1), added par. (38).

(39) the clean electricity production credit determined under section 45Y(a),

Amended 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13701(b)(1), added par. (39).

(40) the clean fuel production credit determined under section 45Z(a), plus

Amended 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 13704(b)(3), added par. (40).

(41) in the case of an eligible small employer (as defined in section 45AA(c)), the military spouse retirement plan eligibility credit determined under section 45AA(a).

Amended 2022

2022 Pub. L. 117-328 Pub. L. 117–328 added par. (41).

Amended 1986, 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 1007(g)(2), amended pars. (1) to (3) generally, substituting pars. (1) and (2) for former pars. (1) to (3), redesignating former par. (4) as (3), and substituting “subparagraph (B) of paragraph (1)” for “subparagraphs (A) and (B) of paragraph (1)” in subpars. (A), (B), (C), and (D).
1988 Pub. L. 100-647 Pub. L. 100–647, § 1007(g)(8), made technical correction to directory language of Pub. L. 99–514, § 701(c)(4), see 1986 Amendment note below.
1986 Pub. L. 99-514 Pub. L. 99–514, § 701(c)(4), as amended by Pub. L. 100–647, § 1007(g)(8), added pars. (1) to (3), redesignated former par. (3) as (4), and struck out former par. (1) “In general” which provided: “The credit allowed under subsection (a) for any taxable year shall not exceed the sum of—
“(A) so much of the taxpayer’s net tax liability for the taxable year as does not exceed $25,000, plus
“(B) 75 percent of so much of the taxpayer’s net tax liability for the taxable year as exceeds $25,000.”
and former par. (2) “Net tax liability”, which provided: “For purposes of paragraph (1), the term ‘net tax liability’ means the tax liability (as defined in section 26(b)), reduced by the sum of the credits allowable under subparts A and B of this part.”

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(1) In general The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of the taxpayer’s net income tax over the greater of—

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(A) the tentative minimum tax for the taxable year, or

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(B) 25 percent of so much of the taxpayer’s net regular tax liability as exceeds $25,000.

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 221(a), substituted “75 percent” for “85 percent”.

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For purposes of the preceding sentence, the term “net income tax” means the sum of the regular tax liability and the tax imposed by section 55, reduced by the credits allowable under subparts A and B of this part, and the term “net regular tax liability” means the regular tax liability reduced by the sum of the credits allowable under subparts A and B of this part.

(2) Empowerment zone employment credit may offset 25 percent of minimum tax

Amended 1984, 1990, 1993, 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1702(e)(4), amended subpar. (C), as in effect on day before date of enactment of the Revenue Reconciliation Act of 1990 (title XI of Pub. L. 101–508, approved Nov. 5, 1990), by inserting before period at end of first sentence “and without regard to the deduction under section 56(h)”.
1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(c)(1), added par. (2) and redesignated former par. (2) as (3).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(B), redesignated par. (3) as (2) and struck out former par. (2) which permitted an offset of regular investment tax credit against 25 percent of minimum tax.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(C), inserted “(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)” after “46(e)(1)” and “(as so in effect)” after “46(e)(2)”.
1984 Pub. L. 98-369 Pub. L. 98–369, § 612(e)(1), substituted “section 26(b)” for “section 25(b)”.

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(A) In general In the case of the empowerment zone employment credit—

Amended 2014

2014 Pub. L. 113-295 Pub. L. 113–295, § 220(b), substituted “credit” for “credit credit” in introductory provisions.

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(i) this section and section 39 shall be applied separately with respect to such credit, and

(ii) for purposes of applying paragraph (1) to such credit—

(I) 75 percent of the tentative minimum tax shall be substituted for the tentative minimum tax under subparagraph (A) thereof, and

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(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the empowerment zone employment credit and the specified credits).

Amended 2002, 2004, 2005, 2010, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(6)(B)(ii), struck out “, the New York Liberty Zone business employee credit,” after “empowerment zone employment credit”.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(B), struck out “the eligible small business credits,” before “and the specified credits”.
2010 Pub. L. 111-240 Pub. L. 111–240, § 2013(c)(1), inserted “the eligible small business credits,” after “the New York Liberty Zone business employee credit,”.
2005 Pub. L. 109-135 Pub. L. 109–135, § 412(f)(1), substituted “, the New York Liberty Zone business employee credit, and the specified credits” for “or the New York Liberty Zone business employee credit or the specified credits”.
2004 Pub. L. 108-357 Pub. L. 108–357, § 711(b), inserted “or the specified credits” after “employee credit”.
2002 Pub. L. 107-147 Pub. L. 107–147, § 301(b)(2), inserted “or the New York Liberty Zone business employee credit” after “employment credit”.

(B) Empowerment zone employment credit For purposes of this paragraph, the term “empowerment zone employment credit” means the portion of the credit under subsection (a) which is attributable to the credit determined under section 1396 (relating to empowerment zone employment credit).

[(3) Repealed. Pub. L. 115–141, div. U, title IV, § 401(d)(6)(B)(iii), Mar. 23, 2018, 132 Stat. 1211]

Amended 1990, 1993, 2002, 2004, 2005, 2010, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(d)(6)(B)(iii), struck out par. (3) which related to special rules for New York Liberty Zone business employee credit.
2010 Pub. L. 111-240 Pub. L. 111–240, § 2013(c)(2), inserted “, the eligible small business credits,” after “the New York Liberty Zone business employee credit”.
2005 Pub. L. 109-135 Pub. L. 109–135, § 412(f)(2), substituted “and the specified credits” for “or the specified credits”.
2004 Pub. L. 108-357 Pub. L. 108–357, § 711(b), inserted “or the specified credits” after “employee credit”.
2002 Pub. L. 107-147 Pub. L. 107–147, § 301(b)(1), added par. (3) and redesignated former par. (3) as (4).
1993 Pub. L. 103-66 Pub. L. 103–66, § 13302(c)(1), added par. (2) and redesignated former par. (2) as (3).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(B), redesignated par. (3) as (2).

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(4) Special rules for specified credits

Amended 2002, 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 711(a), added par. (4) and redesignated former par. (4) as (5).
2002 Pub. L. 107-147 Pub. L. 107–147, § 301(b)(1), added par. (3) and redesignated former par. (3) as (4).

(A) In general In the case of specified credits—

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(i) this section and section 39 shall be applied separately with respect to such credits, and

(ii) in applying paragraph (1) to such credits—

(I) the tentative minimum tax shall be treated as being zero, and

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(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the specified credits).

Amended 2010, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(C), struck out “the eligible small business credits and” before “the specified credits”.
2010 Pub. L. 111-240 Pub. L. 111–240, § 2013(c)(3), inserted “the eligible small business credits and” before “the specified credits”.

(B) Specified credits For purposes of this subsection, the term “specified credits” means—

Amended 2005

2005 Pub. L. 109-135 Pub. L. 109–135, § 412(f)(3), substituted “means” for “includes” in introductory provisions and inserted “and” at end of cl. (i).

(i) for taxable years beginning after December 31, 2004, the credit determined under section 40,

(ii) the credit determined under section 41 for the taxable year with respect to an eligible small business (as defined in paragraph (5)(A) after application of the rules of paragraph (5)(B)),

Amended 2008, 2015, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(D), substituted “(as defined in paragraph (5)(A) after application of the rules of paragraph (5)(B))” for “(as defined in paragraph (5)(C), after application of rules similar to the rules of paragraph (5)(D))”.
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).

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(iii) the credit determined under section 42 to the extent attributable to buildings placed in service after December 31, 2007,

Amended 2007, 2008, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).
2007 Pub. L. 110-28 Pub. L. 110–28 added cls. (iii) and (iv).

(iv) the credit determined under section 45 to the extent that such credit is attributable to electricity or refined coal produced—

“the credit determined under section 45” Opening words

“to the extent that such credit is attributable to electricity or refined coal produced—” Opening words

Textual readingALL OF= a specified credit under section 45

(I) at a facility which is originally placed in service after the date of the enactment of this paragraph, and

(II) during the 4-year period beginning on the date that such facility was originally placed in service,

Amended 2007, 2008, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(b), added cl. (ii) and redesignated former cls. (ii) and (iii) as (iii) and (iv), respectively. Former cl. (iv) redesignated (v).
2007 Pub. L. 110-28 Pub. L. 110–28 added cls. (iii) and (iv).

(v) the credit determined under section 45 to the extent that such credit is attributable to section 45(e)(10) (relating to Indian coal production facilities),

Amended 2008, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.
2008 Pub. L. 110-343 Pub. L. 110–343, § 316(b)(2), added cl. (v). Former cl. (v) redesignated (vi).
2008 Pub. L. 110-343 Pub. L. 110–343, § 103(b)(1), added cl. (v). Former cl. (v) redesignated (vi).
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(c), added cl. (v). Former cl. (v) redesignated (vi).
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(b), redesignated cl. (iv) as (v).

(vi) the credit determined under section 45B,

Amended 2008, 2010, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.
2010 Pub. L. 111-148 Pub. L. 111–148, § 1421(c), added cl. (vi) and redesignated former cls. (vi) to (viii) as (vii) to (ix), respectively.
2008 Pub. L. 110-343 Pub. L. 110–343, § 316(b)(1), redesignated cl. (v) as (vi). Former cl. (vi) redesignated (vii).
2008 Pub. L. 110-343 Pub. L. 110–343, § 103(b)(2), substituted “section 46 to the extent that such credit is attributable to the rehabilitation credit under section 47, but only with respect to” for “section 47 to the extent attributable to”.
2008 Pub. L. 110-343 Pub. L. 110–343, § 103(b)(1), which directed amendment of subpar. (B) by “redesignating clause (vi) as clause (vi) and (vii), respectively”, was executed by redesignating cls. (v) and (vi) as (vi) and (vii), respectively, to reflect the probable intent of Congress.
2008 Pub. L. 110-289 Pub. L. 110–289, § 3022(c), redesignated cl. (v) as (vi).

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(vii) the credit determined under section 45G,

Amended 2008, 2010, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.
2010 Pub. L. 111-148 Pub. L. 111–148, § 1421(c), added cl. (vi) and redesignated former cls. (vi) to (viii) as (vii) to (ix), respectively.
2008 Pub. L. 110-343 Pub. L. 110–343, § 316(b)(1), redesignated cl. (vi) as (vii). Former cl. (vii) redesignated (viii).
2008 Pub. L. 110-343 Pub. L. 110–343, § 103(b)(1), which directed amendment of subpar. (B) by “redesignating clause (vi) as clause (vi) and (vii), respectively”, was executed by redesignating cls. (v) and (vi) as (vi) and (vii), respectively, to reflect the probable intent of Congress.

(viii) the credit determined under section 45R,

Amended 2008, 2010, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.
2010 Pub. L. 111-148 Pub. L. 111–148, § 1421(c), added cl. (vi) and redesignated former cls. (vi) to (viii) as (vii) to (ix), respectively.
2008 Pub. L. 110-343 Pub. L. 110–343, § 316(b)(1), redesignated cl. (vii) as (viii).

(ix) the credit determined under section 45S,

Amended 2010, 2015, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(c), added cl. (ix) and redesignated former cls. (ix) to (xi) as (x) to (xii), respectively.
2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.
2010 Pub. L. 111-148 Pub. L. 111–148, § 1421(c), added cl. (vi) and redesignated former cls. (vi) to (viii) as (vii) to (ix), respectively.

(x) the credit determined under section 46 to the extent that such credit is attributable to the energy credit determined under section 48,

Amended 2015, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(c), added cl. (ix) and redesignated former cls. (ix) to (xi) as (x) to (xii), respectively.
2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), added cl. (v) and redesignated former cls. (v) to (ix) as (vi) to (x), respectively. Former cl. (x) redesignated (xi).
2015 Pub. L. 114-113 Pub. L. 114–113, § 121(b), redesignated cls. (iv) to (ix) as (v) to (x), respectively.

(xi) the credit determined under section 46 to the extent that such credit is attributable to the rehabilitation credit under section 47, but only with respect to qualified rehabilitation expenditures properly taken into account for periods after December 31, 2007, and

Amended 2015, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(c), added cl. (ix) and redesignated former cls. (ix) to (xi) as (x) to (xii), respectively.
2015 Pub. L. 114-113 Pub. L. 114–113, § 186(d)(1), redesignated cl. (x) as (xi).

(xii) the credit determined under section 51.

Amended 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 13403(c), added cl. (ix) and redesignated former cls. (ix) to (xi) as (x) to (xii), respectively.

(5) Rules related to eligible small businesses

Amended 2004, 2010, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(A)(i), substituted “Rules related to eligible small businesses” for “Special rules for eligible small business credits in 2010” in heading.
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(A)(ii), redesignated subpars. (C) and (D) as (A) and (B), respectively.
2010 Pub. L. 111-240 Pub. L. 111–240, § 2013(a), added par. (5) and redesignated former par. (5) as (6).
2004 Pub. L. 108-357 Pub. L. 108–357, § 711(a), added par. (4) and redesignated former par. (4) as (5).

(A) Eligible small business For purposes of this subsection, the term “eligible small business” means, with respect to any taxable year—

Amended 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(A)(i), (ii), redesignated subpar. (C) as (A) and struck out former subpar. (A) which related to eligible small business credits determined in taxable years beginning in 2010.

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(i) a corporation the stock of which is not publicly traded,

(ii) a partnership, or

(iii) a sole proprietorship,

if the average annual gross receipts of such corporation, partnership, or sole proprietorship for the 3-taxable-year period preceding such taxable year does not exceed $50,000,000. For purposes of applying the test under the preceding sentence, rules similar to the rules of paragraphs (2) and (3) of section 448(c) shall apply.

(B) Treatment of partners and S corporation shareholders For purposes of paragraph (4)(B)(ii), any credit determined under section 41 with respect to a partnership or S corporation shall not be treated as a specified credit by any partner or shareholder unless such partner or shareholder meets the gross receipts test under subparagraph (A) for the taxable year in which such credit is treated as a current year business credit.

Amended 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(A)(iii), amended subpar. (B) generally. Prior to amendment, text read as follows: “Credits determined with respect to a partnership or S corporation shall not be treated as eligible small business credits by any partner or shareholder unless such partner or shareholder meets the gross receipts test under subparagraph (C) for the taxable year in which such credits are treated as current year business credits.”
2018 Pub. L. 115-141 Pub. L. 115–141, § 401(b)(5)(A)(i), (ii), redesignated subpar. (D) as (B) and struck out former subpar. (B) which defined “eligible small business credits”.

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(6) Special rules

Amended 2010

2010 Pub. L. 111-240 Pub. L. 111–240, § 2013(a), added par. (5) and redesignated former par. (5) as (6).

(A) Married individuals In the case of a husband or wife who files a separate return, the amount specified under subparagraph (B) of paragraph (1) shall be $12,500 in lieu of $25,000. This subparagraph shall not apply if the spouse of the taxpayer has no business credit carryforward or carryback to, and has no current year business credit for, the taxable year of such spouse which ends within or with the taxpayer’s taxable year.

(B) Controlled groups In the case of a controlled group, the $25,000 amount specified under subparagraph (B) of paragraph (1) shall be reduced for each component member of such group by apportioning $25,000 among the component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term “controlled group” has the meaning given to such term by section 1563(a).

(C) Limitations with respect to certain persons In the case of a person described in subparagraph (A) or (B) of section 46(e)(1) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), the $25,000 amount specified under subparagraph (B) of paragraph (1) shall equal such person’s ratable share (as determined under section 46(e)(2) (as so in effect) of such amount.

(D) Estates and trusts In the case of an estate or trust, the $25,000 amount specified under subparagraph (B) of paragraph (1) shall be reduced to an amount which bears the same ratio to $25,000 as the portion of the income of the estate or trust which is not allocated to beneficiaries bears to the total income of the estate or trust.

(E) Corporations In the case of a corporation—

Amended 2017, 2022

2022 Pub. L. 117-169 Pub. L. 117–169, § 10101(d), amended subpar. (E) generally. Prior to amendment, text read as follows: “In the case of a corporation, this subsection shall be applied by treating the corporation as having a tentative minimum tax of zero.”
2017 Pub. L. 115-97 Pub. L. 115–97, § 12001(b)(1), added subpar. (E).

(i) the first sentence of paragraph (1) shall be applied by substituting “25 percent of the taxpayer’s net income tax as exceeds $25,000” for “the greater of” and all that follows,

(ii) paragraph (2)(A) shall be applied without regard to clause (ii)(I) thereof, and

(iii) paragraph (4)(A) shall be applied without regard to clause (ii)(I) thereof.

(d) Ordering rules For purposes of any provision of this title where it is necessary to ascertain the extent to which the credits determined under any section referred to in subsection (b) are used in a taxable year or as a carryback or carryforward—

Amended 1986, 1988, 1990, 2014

2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(6), struck out par. (3) which related to ordering of credits no longer listed.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(D)(i), substituted “any provision” for “sections 46(f), 47(a), 196(a), and any other provision” in introductory provisions.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(D)(iii), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the employee plan percentage (as defined in section 46(a)(2)(E), as in effect on the day before the date of the enactment of the Tax Reform Act of 1984) shall be treated as referred to after section 46(a)(2).”
1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(e)(8)(A), substituted “Ordering rules” for “Special rules for certain regulated companies” in heading and amended text generally. Prior to amendment, text read as follows: “In the case of any taxpayer to which section 46(f) applies, for purposes of sections 46(f), 47(a), and 196(a) and any other provision of this title where it is necessary to ascertain the extent to which the credits determined under section 40(a), 41(a), 42(a), 46(a), or 51(a) are used in a taxable year or as a carryback or carryforward, the order in which such credits are used shall be determined on the basis of the order in which they are listed in subsection (b).”
1986 Pub. L. 99-514 Pub. L. 99–514, § 252(b)(2), inserted “42(a),”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1171(b)(2), substituted “and 196(a)” for “196(a), and 404(i)” and struck out “41(a),” after “40(a)”.
1986 Pub. L. 99-514 Pub. L. 99–514, § 231(d)(3)(B), inserted “41(a),” after “40(a),”.

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(1) In general The order in which such credits are used shall be determined on the basis of the order in which they are listed in subsection (b) as of the close of the taxable year in which the credit is used.

(2) Components of investment credit The order in which the credits listed in section 46 are used shall be determined on the basis of the order in which such credits are listed in section 46 as of the close of the taxable year in which the credit is used.

Amended 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(b)(2)(D)(ii), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The order in which credits attributable to a percentage referred to in section 46(a) are used shall be determined on the basis of the order in which such percentages are listed in section 46(a) as of the close of the taxable year in which the credit is used.”