Notice 2026-46, 2026-35 I.R.B. 182

Notice 2026-46

Section 43(a) of the Internal Revenue Code provides that for purposes of section 38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs (qualified costs) for such taxable year.

Section 43(b)(1) provides that the amount of the credit determined under § 43(a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as — (A) the amount by which the reference price for the calendar year preceding the calendar year in which the taxable year begins exceeds $28, bears to (B) $6. The term reference price is defined in § 43(b)(2) as, with respect to any calendar year, the reference price determined for such calendar year under § 45K(d)(2)(C). Section 45K(d)(2)(C) provides that, with respect to a calendar year, the reference price is the Secretary’s estimate of the annual average wellhead price per barrel for all domestic crude oil the price of which is not subject to regulation by the United States.

Section 43(b)(3)(A) provides that, for taxable years beginning in a calendar year after 1991, the $28 amount in § 43(b)(1)(A) is adjusted for inflation by multiplying that amount by the inflation adjustment factor for that calendar year. Section 43(b)(3)(B) defines the term inflation adjustment factor as, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. The term GNP implicit price deflator means the first revision of the implicit price deflator for the gross national product, as computed and published by the Secretary of Commerce.

For calendar year 2026, the GNP implicit price deflator for the preceding calendar year (2025) is 128.888 and the GNP implicit price deflator for 1990 is 59.266, yielding an inflation adjustment factor of 2.1747. Accordingly, the $28 amount in § 43(b)(1)(A) is adjusted to $60.892.

Based on data published by the United States Energy Information Administration, domestic first purchase crude oil prices averaged $63.40 per barrel in calendar year 2025. Accordingly, the reference price for calendar year 2025 is $63.40.

Because the reference price for calendar year 2025 ($63.40) exceeds $60.892 by $2.508 (that is, an amount less than $6), a portion of the enhanced oil recovery credit for qualified costs paid or incurred in 2026 is phased out using the following ratio:

Therefore, the enhanced oil recovery credit is an amount equal to 8.73% (15% – 6.27%) of qualified costs paid or incurred in 2026.

Table 1 contains the GNP implicit price deflator used for calendar year 2026, as well as the previously published GNP implicit price deflators used for calendar years 1991 through 2025.

Notice 2026-46 TABLE 1 GNP IMPLICIT PRICE DEFLATORS

Calendar Year GNP Implicit Price Deflator

1990 112.9 (used for 1991)

1991 117.0 (used for 1992)

1992 120.9 (used for 1993)

1993 124.1 (used for 1994)

1994 126.0 (used for 1995)*

1995 107.5 (used for 1996)

1996 109.7 (used for 1997)**

1997 112.35 (used for 1998)

1998 112.64 (used for 1999)***

1999 104.59 (used for 2000)

2000 106.89 (used for 2001)

2001 109.31 (used for 2002)

2002 110.63 (used for 2003)

2003 105.67 (used for 2004)****

2004 108.23 (used for 2005)

2005 112.129 (used for 2006)

2006 116.036 (used for 2007)

2007 119.656 (used for 2008)

2008 122.407 (used for 2009)

2009 109.764 (used for 2010)*****

2010 110.654 (used for 2011)

2011 113.347 (used for 2012)******

2012 115.387 (used for 2013)

2013 106.710 (used for 2014)*******

2014 108.407 (used for 2015)********

2015 109.868 (used for 2016)

2016 111.528 (used for 2017)

2017 113.500 (used for 2018)

2018 110.308 (used for 2019)*********

2019 112.257 (used for 2020)

2020 113.586 (used for 2021)

2021 118.586 (used for 2022)**********

2022 127.194 (used for 2023)

2023 122.179 (used for 2024)***********

2024 125.139 (used for 2025)

2025 128.888 (used for 2026)

* Beginning in 1995, the GNP implicit price deflator was rebased relative to 1992. The 1990 GNP implicit price deflator used to compute the 1996 § 43 inflation adjustment factor is 93.6.

** Beginning in 1997, two digits follow the decimal point in the GNP implicit price deflator. The 1990 GNP price deflator used to compute the 1998 § 43 inflation adjustment factor is 93.63.

*** Beginning in 1999, the GNP implicit price deflator was rebased relative to 1996. The 1990 GNP implicit price deflator used to compute the 2000 § 43 inflation adjustment factor is 86.53.

**** Beginning in 2003, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2004 § 43 inflation adjustment factor is 81.589.

***** Beginning in 2009, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2010 § 43 inflation adjustment factor is 72.199.

****** Beginning in 2011, the 1990 GNP implicit price deflator used to compute the 2012 § 43 inflation adjustment factor is 72.260.

******* Beginning in 2013, the GNP implicit price deflator was rebased, and the 1990 GNP implicit price deflator used to compute the 2014 § 43 inflation adjustment factor is 66.803.

******** Beginning in 2014, the 1990 GNP implicit price deflator used to compute the 2015 § 43 inflation adjustment factor is 66.732.

********* Beginning in 2018, the 1990 GNP implicit price deflator used to compute the 2019 § 43 inflation adjustment factor is 63.637.

********** Beginning in 2021, the 1990 GNP implicit price deflator used to compute the 2022 § 43 inflation adjustment factor is 63.604.

*********** Beginning in 2023, the 1990 GNP implicit price deflator used to compute the 2024 § 43 inflation adjustment factor is 59.266.

Table 2 contains the inflation adjustment factor and the phase-out amount for taxable years beginning in calendar year 2026 as well as the previously published inflation adjustment factors and phase-out amounts for taxable years beginning in calendar years 1991 through 2025.

Notice 2026-46 TABLE 2 INFLATION ADJUSTMENT FACTORS AND PHASE-OUT AMOUNTS

Calendar Year Inflation Adjustment Factor Phase-out Amount

1991 1.0000 0

1992 1.0363 0

1993 1.0708 0

1994 1.0992 0

1995 1.1160 0

1996 1.1485 0

1997 1.1720 0

1998 1.1999 0

1999 1.2030 0

2000 1.2087 0

2001 1.2353 0

2002 1.2633 0

2003 1.2785 0

2004 1.2952 0

2005 1.3266 0

2006 1.3743 100 percent

2007 1.4222 100 percent

2008 1.4666 100 percent

2009 1.5003 100 percent

2010 1.5203 100 percent

2011 1.5326 100 percent

2012 1.5686 100 percent

2013 1.5968 100 percent

2014 1.5974 100 percent

2015 1.6245 100 percent

2016 1.6464 0

2017 1.6713 0

2018 1.7008 1.069 percent

2019 1.7334 100 percent

2020 1.7640 100 percent

2021 1.7849 0

2022 1.8607 100 percent

2023 1.9998 100 percent

2024 2.0615 100 percent

2025 2.1115 100 percent

2026 2.1747 6.27 percent

DRAFTING INFORMATION

The principal author of this notice is Glenn Kats of the Office of Associate Chief Counsel (Energy, Credits & Excise Tax). For further information regarding this notice, contact Mr. Kats at (202) 317-3995 (not a toll-free call).