Inflation Reduction Act Provisions for Fuels

FUELS
TAX PROVISIONS Extension of Incentives for Biodiesel, Renewable Diesel, and Alternative Fuels
DESCRIPTION To provide tax credits for biodiesel and renewable diesel.
ELIGIBLE RECIPIENTS Producers of biodiesel, biodiesel mixtures, and renewable diesel.
BASE CREDIT AMOUNT $1.00 per gallon for biodiesel, biodiesel mixtures, and renewable diesel. Additional $0.10 credit for small agri-diesel producers. In addition, there is a $1.00-per-gallon excise tax credit for biodiesel and renewable diesel mixtures.
BONUS CREDIT AMOUNT N/A
U.S. CODE 26 U.S. Code 40A, 26 U.S. Code 6426(c), 26 U.S. Code 6427(e)
IRA SECTION 13201
FUNDING MECHANISM Income tax credit and excise tax credit
NEW OR MODIFIED? Extended from 12/31/2022 through 12/31/2024.
PERIOD OF AVAILABILITY Through 12/31/24
DIRECT PAY No
TRANSFERABLE No
STACKABLE No rules
TRIBAL ELIGIBILITY No
RELEVANT LINKS Fuel Tax Credits | (irs.gov)

 

FUELS
TAX PROVISIONS Extension of Tax Credit for Alternative Fuels
DESCRIPTION To provide tax credits for alternative fuels
ELIGIBLE RECIPIENTS Registered producers
BASE CREDIT AMOUNT $0.50 per gallon for alternative fuels and alternative fuel mixtures.
BONUS CREDIT AMOUNT N/A
U.S. CODE 26 U.S. Code 6426(d), 26 U.S. Code 6426(e), 26 U.S. Code 6427(e)
IRA SECTION 13201
FUNDING MECHANISM Excise tax credit
NEW OR MODIFIED? Extended from 12/31/2021 through 12/31/2024.
PERIOD OF AVAILABILITY Through 12/31/24
DIRECT PAY No
TRANSFERABLE No
STACKABLE Fuels eligible for the biodiesel mixture excise tax credit or the income tax credits under sections 40A or 40B (sustainable aviation fuels) are not eligible for the alternative fuels or alternative fuels mixture excise tax credits.
TRIBAL ELIGIBILITY No
RELEVANT LINKS Fuel Tax Credits | (irs.gov)

 

 

FUELS
TAX PROVISIONS Extension of Second-Generation Biofuel Incentives
DESCRIPTION To provide an income tax credit for second-generation biofuel production.
ELIGIBLE RECIPIENTS Registered producers of second-generation biofuels.
BASE CREDIT AMOUNT $1.01 per gallon
BONUS CREDIT AMOUNT N/A
U.S. CODE 26 U.S. Code 40
IRA SECTION 13202
FUNDING MECHANISM Income tax credit (general business credit, nonrefundable)
NEW OR MODIFIED? Extended from 12/31/2021 through 12/31/2024.
PERIOD OF AVAILABILITY Through 12/31/24
DIRECT PAY No
TRANSFERABLE No
STACKABLE Fuel eligible for the section 40 credit is not eligible for the credits under section 40A/6426.
TRIBAL ELIGIBILITY No
RELEVANT LINKS Fuel Tax Credits | (irs.gov)

 

 

FUELS
TAX PROVISIONS Sustainable Aviation Fuel Credit
DESCRIPTION Provides a tax credit for the sale or use of sustainable aviation fuel (SAF) that achieves a lifecycle greenhouse gas emissions reduction of at least 50% as compared with petroleum-based jet fuel
ELIGIBLE RECIPIENTS Producers and blenders of SAF-kerosene fuel mixtures for aviation. Qualified SAF mixture must be made in the United States, and fueling of the aircraft must occur in the United States.
BASE CREDIT AMOUNT $1.25/gallon of SAF.
BONUS CREDIT AMOUNT Up to $0.50/gallon depending on lifecycle greenhouse gas emissions of SAF relative to petroleum-based jet fuel.
U.S. CODE 26 U.S. Code 40B
IRA SECTION 13203
FUNDING MECHANISM Tax credit
NEW OR MODIFIED? New
PERIOD OF AVAILABILITY January 1, 2023-December 31, 2024
DIRECT PAY No
TRANSFERABLE No
STACKABLE Credit can be claimed against income tax or fuel excise tax. Credit included in gross income (similar to alcohol and biodiesel fuels credits).
TRIBAL ELIGIBILITY No
RELEVANT LINKS Sustainable Aviation Fuel Credit | (irs.gov)

 

 

FUELS
TAX PROVISIONS Clean Fuel Production Credit
DESCRIPTION Provides a tax credit for domestic production of clean transportation fuels, including sustainable aviation fuels.
ELIGIBLE RECIPIENTS Registered producers in the United States. Fuels with less than 50 kilograms of carbon dioxide equivalent per million British thermal units (CO2e per mmBTU) qualify as clean fuels eligible for credits.
BASE CREDIT AMOUNT The base amount is $0.20/gallon for non-aviation fuel and $0.35/gallon for aviation fuel, multiplied by the carbon dioxide "emissions factor" of the fuel. Inflation adjusted after 2024.
BONUS CREDIT AMOUNT Credit is 5 times the base amount ($1/gallon for non-aviation fuel, $1.75 gallon for aviation fuel, multiplied by the emissions factor) for facilities meeting prevailing wage and apprenticeship requirements. Inflation adjusted after 2024.
U.S. CODE 26 U.S. Code 45Z
IRA SECTION 13704
FUNDING MECHANISM Production tax credit
NEW OR MODIFIED? New
PERIOD OF AVAILABILITY Fuel produced after 12/31/24 and used or sold before 12/31/27.
DIRECT PAY Yes, for tax-exempt organizations; states; political subdivisions; the Tennessee Valley Authority; Indian Tribal governments; Alaska Native Corporations; and rural electricity co-ops.
TRANSFERABLE Yes
STACKABLE No rules
TRIBAL ELIGIBILITY Yes
RELEVANT LINKS Inflation Reduction Act of 2022 | (irs.gov)