CIRCLE Act
- Bill Number
- H.R. 4466
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-07-16: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-05-15T08:07:33Z
AI-Generated Summary
Purpose
The CIRCLE Act of 2025 aims to encourage investment in recycling infrastructure by creating a new tax credit under the Internal Revenue Code. It seeks to boost the U.S. recycling rate toward the Environmental Protection Agency's goal of 50% by 2030 (currently around 30%), support domestic markets for recycled materials, and counter competition from imported non-recycled or unverified materials.
Key Provisions
- Recycling Property Investment Credit (Section 48F): Provides a tax credit equal to 30% of the "qualified investment" in eligible recycling property placed in service after December 31, 2025.
- Qualified Investment: The cost basis (original value for tax purposes) of eligible property.
- Eligible Property: Depreciable (eligible for wear-and-tear deductions over time) property used in recycling, such as equipment for processing reusable or recyclable materials. It must be newly constructed, reconstructed, or acquired with original use starting with the taxpayer.
- Bonus and Adjustments:
- An additional 10% credit for property meeting domestic content requirements (similar to rules for clean energy credits, ensuring a certain percentage of components are U.S.-made).
- Special rules apply for progress payments on long-term projects, subsidized property (to avoid double-dipping with other aid), and elective payments (where nonprofits or governments can receive cash instead of credits, with a phaseout).
- Credit Phase-Out Schedule: The credit percentage decreases over time based on the project's start or service date:
- 100% for projects starting 2026–2032.
- 80% in 2033, 60% in 2034, 40% in 2035, 20% in 2036, and 0% from 2037 onward.
- Limitations:
- No double benefits: Other tax credits or deductions are disallowed for the same property to the extent of this credit, and the property's tax basis is reduced by the credit amount.
- Definitions: "Qualified recycling property" includes facilities for sorting, processing, and reusing materials (e.g., metals, plastics, electronics like computers and video displays). "Recycle" excludes low-quality processing, energy production from waste, incineration, or landfill uses.
- Administration: The IRS Secretary can issue regulations for recordkeeping and reporting to enforce the credit.
Significant Changes to Existing Law
- Adds a new Section 48F to the Internal Revenue Code, inserting it after the clean electricity investment credit (Section 48E), making it part of the general business investment tax credit framework (Section 46).
- Expands definitions from Section 168(m) (bonus depreciation for certain property) to include more electronics in recyclable materials, while narrowing "recycle" to focus on high-quality reuse rather than waste-to-energy.
- Introduces recycling-specific incentives modeled on energy and manufacturing credits, but with a tailored phase-out to encourage early adoption without permanent entitlement.
Potential Impacts
- On Government Agencies: The IRS will need to administer the credit, including verifying domestic content and phase-outs, potentially increasing administrative workload. The EPA may indirectly benefit from higher recycling rates aligning with national goals.
- On Citizens and Businesses: Encourages private investment in upgrading or building recycling facilities, potentially lowering costs for recycled materials and creating jobs in the recycling sector. Taxpayers (e.g., companies) can reduce their tax bills, but must comply with documentation.
- On International Relations: Strengthens U.S. domestic recycling to compete with foreign imports of cheap virgin (new) materials, reducing reliance on international supply chains and promoting "circular economies" (reusing materials in loops).
- Broader Effects: Could increase the supply of U.S.-sourced recycled content, supporting sustainable manufacturing and reducing environmental waste, though the phase-out may limit long-term incentives.
Main Stakeholders Affected
- Recycling and Manufacturing Businesses: Primary beneficiaries, as they can claim credits for infrastructure investments, gaining a competitive edge in domestic markets.
- Investors and Taxpayers: Individuals or entities funding recycling projects, who offset taxes but face basis reductions and reporting requirements.
- Government Entities: IRS for enforcement; EPA and local governments for aligned environmental and economic goals; nonprofits eligible for elective payments.
- Consumers and Environment: Indirectly benefit from cheaper recycled goods, reduced waste, and progress toward recycling targets, though impacts depend on adoption rates.
- International Competitors: Foreign suppliers of raw materials may face reduced U.S. market access due to boosted domestic recycling.
Notable Legal, Constitutional, or Political Implications
- Legal: Aligns with existing tax code structures (e.g., investment credits), minimizing conflicts, but requires IRS guidance to clarify "recycle" exclusions and prevent abuse. No double-benefit rule ensures fairness in tax treatment.
- Constitutional: Standard congressional authority over taxation (Article I, Section 8); no apparent free speech, due process, or equal protection issues, as it applies uniformly to qualifying property.
- Political: Bipartisan introduction (by Reps. Suozzi and Fitzpatrick) signals cross-aisle support for environmental-economic policy. Ties into broader green initiatives but includes a phase-out to control federal spending, potentially appealing to fiscal conservatives while advancing sustainability goals.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Suozzi, Thomas R. [D-NY-3]
Cosponsors (5)
Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Carson, André [D-IN-7], Rep. Riley, Josh [D-NY-19], Rep. Lawler, Michael [R-NY-17], Rep. Hurd, Jeff [R-CO-3]
Recent Actions
- 2025-07-16: Referred to the House Committee on Ways and Means.
- 2025-07-16: Introduced in House
- 2025-07-16: Introduced in House
Bill Versions
- Cultivating Investment in Recycling and Circular Local Economies Act of 2025 — issued 2025-07-16 — PDF (9 pages)