S. 3531 establishes a new federal tax credit for businesses that install combined heat and power systems—facilities that simultaneously generate electricity and capture waste heat for productive use. The bill provides a 10 percent tax credit on the cost of qualifying systems, with bonuses of up to 10 percentage points for projects using domestically-produced equipment or located in economically disadvantaged energy communities. The tax credit applies only to systems that achieve at least 60 percent energy efficiency, produce at least 20 percent of their energy as thermal energy and 20 percent as electrical or mechanical power, and are between 25 and 50 megawatts in electrical capacity (with equivalent mechanical capacity limits). The credit applies to systems whose construction begins on or after January 1, 2025, and the Internal Revenue Service will issue implementing regulations to establish performance standards and recordkeeping requirements for claiming the credit.