HR4128-119

What This Bill Does

The CIRCUIT Act expands the Internal Revenue Code section 45X advanced manufacturing production credit to include distribution transformers. For each distribution transformer, the credit amount is 10 percent of the taxpayer's production costs. The bill also adds distribution transformers to the list of eligible components and uses the Energy Policy and Conservation Act definition of distribution transformer. The amendments apply to components produced and sold after the date that is 90 days after enactment. The practical effect is a targeted production tax credit for domestic transformer manufacturing, a supply-chain area important to electric utilities and grid resilience.

Who Benefits and How

Distribution transformer manufacturers benefit from a new 10 percent production-cost credit under section 45X. Electric utilities benefit if the credit expands transformer supply or lowers procurement pressure. Grid resilience planners benefit from a tax incentive aimed at critical utility infrastructure components. Domestic electrical equipment workers benefit if the credit supports transformer production jobs.

Who Bears the Burden and How

The Internal Revenue Service must administer the expanded section 45X credit for distribution transformers. Taxpayers claiming the credit must document production costs and qualifying sales after the 90-day effective date. Federal taxpayers bear reduced revenue from the new production credit. Foreign transformer suppliers may face a disadvantage if domestic producers receive the credit.

Key Provisions

• Amends section 45X to add distribution transformers as eligible components.
• Provides a credit equal to 10 percent of taxpayer production costs for distribution transformers.
• Uses the Energy Policy and Conservation Act definition of distribution transformer.
• Applies to components produced and sold more than 90 days after enactment.