H.R. 5686 — Battery Fire Prevention Act

This section establishes a new general business credit equal to 30% of qualified battery detector expenses for taxpayers in the trade or business of recycling. Qualified expenses are amounts paid or incurred for the purchase of a new device—which must commence original use with the taxpayer—that uses X-ray technology, artificial intelligence, radio-frequency identification, or other proven technology to detect batteries. The credit applies to taxable years beginning after December 31, 2025, with no double benefit allowed (i.e., no other credit or deduction for the expenses and a basis reduction for the property).

This section establishes a 5% excise tax on the sale of any battery by the manufacturer, producer, or importer, applicable to sales made after December 31, 2025.

This section establishes the Lithium Battery Buy-Back Trust Fund in the Treasury of the United States, to consist of amounts equivalent to taxes received under section 4191 of the Internal Revenue Code after December 31, 2025. Amounts in the trust fund are available, without further appropriation, to the Secretary of Energy to carry out the National Battery Recycling Program under section 5 of the Battery Fire Prevention Act.

This section directs the Secretary of Energy and the EPA Administrator, not later than 5 years after enactment, to jointly establish the National Battery Recycling Program to recover and recycle used lithium batteries (i.e., lithium metal batteries or lithium-ion batteries). Under the program, (1) the Secretary identifies and approves lithium battery recycling facilities—including recipients of grants under section 40207 of the Infrastructure Investment and Jobs Act (42 U.S.C. 18741)—and publishes a list of them; and (2) the Secretary and Administrator award competitive grants to approved facilities for systems to accept and collect used lithium batteries, under which a facility may offer financial incentives to individuals who turn in batteries. The program is funded solely from the Lithium Battery Buy-Back Trust Fund, and each federal agency head must prioritize, to the maximum extent possible, purchasing lithium batteries from approved facilities.