CIRCLE Act
- Sponsor
- Rep. Suozzi, Thomas R. [D-NY-3]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 16, 2025
Bottom line
The CIRCLE Act aims to boost U.S. recycling rates and strengthen domestic manufacturing by offering a substantial, but temporary, tax credit for investments in high-quality recycling infrastructure and equipment.
What it actually does
This bill establishes a new 30% investment tax credit for businesses that invest in qualified recycling property, such as new or upgraded recycling facilities and equipment. It includes a 10 percentage point bonus for using domestically sourced components and outlines a phase-out schedule for the credit starting in 2033, aiming to incentivize significant, timely investment in domestic recycling infrastructure.
Proponents argue
Supporters argue that this bill is essential to help the U.S. achieve its national recycling goal of 50% by 2030, which currently hovers around 30%. They contend that the tax credit will stimulate crucial investment in modern recycling operations, increase the supply of domestically recycled materials, create jobs, and protect the domestic market from unfair competition posed by international dumping of virgin materials.
Opponents contend
Critics might argue that establishing a new tax credit could be an inefficient use of taxpayer funds, potentially subsidizing investments that businesses might undertake regardless. Concerns could also be raised about the administrative complexity for the IRS and businesses in defining and verifying 'qualified recycling property' and 'domestic content,' as well as the potential for the credit to disproportionately benefit larger corporations.
The bill is concise and its core provisions are understandable with a moderate time investment, making it accessible for a thorough review.
Section 1
Short Title - 'CIRCLE Act'
This section formally names the legislation the "Cultivating Investment in Recycling and Circular Local Economies Act of 2025" or, more simply, the "CIRCLE Act." This provides a concise and recognizable reference for the bill in public and legislative discourse.
Supporters argue
A clear and memorable short title helps to communicate the bill's purpose and facilitates public and legislative engagement with the policy.
Critics contend
No specific opposition is typically raised against short titles, as they are primarily administrative and descriptive.
Tradeoffs
None apparent for this provision.
Section 2
Congressional Findings on Recycling Challenges and Goals
This section outlines Congress's foundational understanding and rationale for the bill. It highlights the national recycling goal of 50% by 2030, the current low rate of approximately 30%, the necessity of new infrastructure investment, the demand for domestic recycled materials, and the competitive threat from international virgin material dumping.
Section 3(a), new section 48F(a)
Establishment of 30% Recycling Property Investment Credit
This core provision amends the Internal Revenue Code to create a new tax credit, the 'recycling property investment credit,' equal to 30% of the qualified investment made in eligible recycling property during a taxable year. This directly incentivizes businesses to invest in new or upgraded facilities and equipment for recycling.
Section 3(a), new section 48F(b)(2)
Definition of Eligible Property for the Credit
This section defines what constitutes 'eligible property' for the recycling property investment credit. To qualify, property must be 'qualified recycling property,' be eligible for depreciation, and either be newly constructed/reconstructed by the taxpayer or be acquired with its original use commencing with the taxpayer. This ensures the credit targets new investments rather than existing assets.
Section 3(a), new section 48F(c)(3)
10 Percentage Point Domestic Content Bonus Credit
This provision offers an additional 10 percentage points to the base 30% credit (making it 40%) if the qualified investment meets domestic content requirements. These requirements are similar to those found in section 45(b)(9)(B) of the tax code, which typically mandate a certain percentage of components to be manufactured in the United States.
Section 3(a), new section 48F(d)
Recycling Property Investment Credit Phase-Out Schedule
The bill includes a structured phase-out for the credit. It remains at 100% of its value (30% base, plus bonus if applicable) for property with a 'determination date' (when construction begins or property is placed in service) before December 31, 2032. After that, the credit gradually decreases by 20% each year, reaching 0% for property with a determination date on or after January 1, 2037.
Section 3(a), new section 48F(e)
Denial of Double Benefits for Recycling Property
This section prevents taxpayers from receiving multiple federal tax benefits for the same investment. It states that no other credit or deduction shall be allowed for property to the extent of the recycling property investment credit, and the basis of such property (used for depreciation calculations) must be reduced by the amount of the credit claimed.
Section 3(a), new section 48F(g)
Key Definitions for Qualified Recycling Property and Processes
This section defines critical terms for the credit. 'Qualified recycling property' references existing tax code (section 168(m)(3)(A)). 'Qualified reuse and recyclable materials' is expanded to include video display and computer devices. Crucially, 'recycle' is defined by referencing section 168(m)(3)(C) but *explicitly excludes* methods that don't preserve original material quality, don't result in material usable for its initial purpose or as virgin feedstock substitute, or involve using waste as fuel, for energy production, incineration, alternate operating cover, or within a landfill.
The bill defines 'qualified recycling property' and the base meaning of 'recycle' by referencing existing provisions in section 168(m)(3) of the Internal Revenue Code. This means a full understanding requires consulting external statutory text.
Section 3(a), new section 48F(g)(1) and (3)
Why it matters:This is standard legislative practice to avoid redundancy when amending existing code. However, it increases the complexity for a casual reader who would need to consult external statutes to fully understand the bill's implications.
Case for: Efficient drafting by leveraging existing definitions, ensuring consistency with other tax provisions related to recycling and avoiding unnecessary repetition in the bill text.
Case against: Increases the cognitive load for readers, as the bill is not self-contained and requires external research to fully comprehend the eligibility criteria for the tax credit.
Estimated impact: These external definitions form the foundational eligibility criteria for the entire tax credit, impacting all potential beneficiaries and the types of projects that can qualify.
The bill explicitly excludes certain activities from the definition of 'recycle' for the purpose of this credit. These exclusions include methods that do not preserve original material quality, do not result in material usable for its initial purpose or as virgin feedstock substitute, or involve using waste as fuel, for energy production, incineration, alternate operating cover, or within a landfill.
Section 3(a), new section 48F(g)(3)(A) and (B)
Why it matters:These exclusions represent critical policy choices that narrow the scope of the credit, likely to prevent subsidizing activities that some consider 'downcycling' or waste disposal rather than true, high-value recycling. Their placement in definitions can make them less prominent than the main credit establishment.
Case for: Ensures the tax credit specifically targets high-value, closed-loop recycling processes, aligning with environmental goals of material preservation and circular economy principles, and preventing subsidies for less desirable waste management practices.
Case against: Some waste management companies or energy producers might argue these exclusions are too narrow, preventing the credit from supporting beneficial waste-to-energy or material recovery initiatives that still reduce landfill volume or fossil fuel use.
Estimated impact: Significantly shapes the types of projects that will receive federal tax incentives, potentially redirecting investment away from certain waste processing technologies and towards others.