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Internal Revenue Code of 1986

The main body of federal tax law in the United States, which this bill would amend.

Tax Credit

A direct reduction in the amount of tax owed, dollar-for-dollar. Unlike a deduction, which reduces taxable income, a credit directly reduces the tax bill.

Combined Heat and Power (CHP) System Property

A highly efficient energy system that uses a single fuel source (like natural gas or biomass) to simultaneously produce both electricity (or mechanical power) and useful heat.

Basis (of property)

In tax terms, this generally refers to the cost of an asset, used to calculate depreciation, gains, or losses, and in this case, the amount on which a tax credit is calculated.

Energy Communities

Specific geographic areas, often those with historical ties to fossil fuel industries, identified as needing support for economic transition to new energy sectors.

Domestic Content

A requirement that a certain percentage of the components or manufacturing processes for a product must originate within the United States.

Taxable year

The annual accounting period for keeping records and reporting income and expenses, often a calendar year for individuals or a fiscal year for businesses.