Tax insight

Expansion of PTP qualifying income embraces certain low-carbon energy activities

Insight
5 minute read
August 06, 2025

What happened?

Public Law No: 119-21, the One Big Beautiful Bill Act (the Act), which was signed into law on July 4, includes a provision expanding the definition of qualifying income for publicly traded partnerships. For tax years beginning after December 31, 2025, qualifying income includes income from certain hydrogen, carbon capture, and electricity generation from advanced nuclear, hydropower, and geothermal energy projects.

Why is it relevant?

The Act expands the definition of “qualifying income” for publicly traded partnerships (PTPs – sometimes referred to as master limited partnerships or MLPs) to include certain low-carbon energy activities. For companies in the hydrogen, carbon capture, advanced nuclear, hydropower, or geothermal sectors, the expansion of qualifying income could facilitate the use of a PTP, changing the way they raise capital and structure their businesses.

Action to consider

Companies that may be eligible to use an MLP structure under the revised qualifying income rules should reach out to their advisors to discuss the benefits and feasibility of the structure.