House Bill No. by Representative Owen establishes a new income tax credit for taxpayers who incur costs related to developing carbon sequestration wells that are subsequently prohibited by local ordinances. The bill defines "eligible costs" as documented expenditures on Class V well testing, which includes drilling, equipment, labor, and geological assessments incurred before the effective date of the local ordinance. The credit amount is capped at $5 million per taxpayer and must be allocated over five consecutive taxable years, with a total limit of $25 million in credits granted per taxable year.

To qualify for the credit, taxpayers must submit an application to the Department of Revenue within 180 days of the local ordinance's effective date, including necessary documentation. The Department of Revenue, in consultation with the Department of Energy and Natural Resources, will certify the eligible costs and issue or deny credits within 90 days of application receipt. The bill also stipulates that any unused credit can be carried forward for up to five years, prohibits taxpayers from receiving other state tax credits for the same activity, and sets a deadline for credits to be earned by December 31, 2031. The provisions of this act will apply to taxable periods beginning on or after January 1, 2026, with an effective date of January 1, 2026.