On July 4, 2025, President Trump signed into law the “One Big Beautiful Bill Act” or “BBB.” This comprehensive budget reconciliation bill includes provisions related to tax policy, federal spending, healthcare, border security, energy, and more.
Notably, the BBB includes provisions that expand the scope of “qualifying income” for publicly traded partnerships (also known as MLPs). Effective for tax years beginning after December 31, 2025, MLP qualifying income will also include income and gains derived from:
- the transportation and storage of liquified hydrogen or compressed hydrogen;
- the transportation or storage of certain alcohol fuels, biodiesel fuels, alternative fuel mixtures and sustainable aviation fuels;
- certain carbon capture facilities;
- the production of electricity from certain advanced nuclear facilities;
- the production of electricity or thermal energy from geothermal or qualified hydropower sources; and
- the operation of certain geothermal energy properties.
The BBB’s expansion of the scope of activities that generate qualifying income may allow existing publicly traded partnerships (particularly those focused on midstream operations) to expand their current operations or invest in new activities and could spur interest in the formation of new MLPs with assets and operations focused on these expanded qualifying activities.
Philip Haines also contributed to this article.