Summary
The IRS has updated rules for a tax credit that encourages U.S. companies to produce cleaner transportation fuels. This tax credit, part of President Trump's One Big Beautiful Bill, gives producers a financial incentive to create fuel with lower greenhouse gas emissions until 2029.
Key Facts
- The IRS issued an update about the clean-fuel tax credit under President Trump's One Big Beautiful Bill.
- This credit aims to spur investment in fuels that produce less greenhouse gas.
- The credit, called the 45Z clean fuel production credit, was adjusted by OBBB.
- U.S., Mexican, and Canadian feedstocks are eligible for the credit.
- The credit is valid through 2029.
- New rules limit participation by foreign entities and prohibit negative emissions rates except for certain fuels.
- The proposal provides guidelines on how to qualify and calculate the tax credit.
- Denatured and undenatured ethanol qualify as transportation fuels for the credit.
