1. Short title This Act may be cited as the Carbon Reduction and Tax Credit Act . 2. Excise tax on carbon content of fuels (a) In general Chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end thereof the following new subchapter: E Carbon Content Fee Sec. 4691. Carbon content. 4691. Carbon content (a) In general In the case of a coal mine or an oil or gas well, there is hereby imposed a tax equal to $40 per ton of carbon contained in fuel produced— (1) at such mine or well located in the United States or, (2) entered into the United States for consumption, use, or warehousing. (b) Adjustment for years after 2018 (1) In general In the case of any calendar year after 2019, the amount under subsection (a) shall be increased by an amount equal to— (A) such amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined— (i) by substituting calendar year 2018 for calendar year 2016 in subparagraph (A)(ii) thereof, and (ii) by substituting for the C–CPI–U referred to in section 1(f)(3)(A) the amount that such CPI would have been if the annual percentage increase in CPI with respect to each year after 2018 had been one percentage point greater. (2) Terms related to CPI (A) Annual percentage increase For purposes of subparagraph (B)(ii)(II), the term annual percentage increase means the percentage (if any) by which C–CPI–U for any year exceeds the C–CPI–U for the prior year. (B) Other terms Terms used in this paragraph which are also used in section 1(f)(3) shall have the same meanings as when used in such section. (3) Rounding Any increase determined under subparagraph (B) shall be rounded to the nearest multiple of $50. . (b) Clerical amendment The table of subchapters for chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Subchapter E—Carbon Content fee . (c) Effective date The amendments made by this section shall apply to fuel produced after December 31, 2018. 3. Credit (a) In