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Tax Credit

A reduction in the amount of tax a person or business owes, directly lowering their tax bill. Unlike a deduction, which reduces taxable income, a credit reduces the tax itself.

Zero-Emission Electric Equipment

Tools and machines powered by electricity (from batteries, solar, or the power grid) that do not release pollutants into the air during operation, such as electric lawnmowers, trimmers, or leaf blowers.

Basis

For tax purposes, the original cost of an asset (like equipment) adjusted for certain events, used to calculate depreciation, casualty losses, or gains/losses when the asset is sold. In this bill, it's the cost used to calculate the credit amount.

Elective Payment (Direct Pay)

A feature allowing a business or organization to choose to receive the value of a tax credit as a direct cash payment from the government, even if they don't owe enough taxes to fully use the credit to reduce their tax bill.

Transferability

The ability to sell or transfer a tax credit to another taxpayer (person or business) who can then use it to reduce their own tax liability. This allows entities that cannot fully use a credit to still benefit from its value.

Internal Revenue Code of 1986

The main body of federal tax law in the United States, which the IRS uses to collect taxes. This bill makes changes to this code.