Clean Fuel Production Credit 45Z

What qualifies

A credit for the production and sale of clean transportation fuels emitting no more than 50 kilograms of CO2 per 1 million British Thermal Units (MMBtu). The fuel must be suitable for use in highway vehicles or aircrafts. The tax credit is intended to encourage the production of clean fuels with 50% lower greenhouse gas emissions than petroleum.

Incentive value

The credit value is based on a sliding scale, increasing as GHG emissions of the fuel approach zero.

• The base credit amount is $0.20 per gallon for non-aviation fuel and $0.35 per gallon for aviation fuel.
• If prevailing wage and apprenticeship requirements are met, the base credit amount is $1.00 per gallon for non-aviation fuel and $1.75 per gallon for aviation fuel.

Direct pay is available for tax-exempt entities.

You may transfer the credit by selling all or a portion of the tax credit to an unrelated taxpayer.

Facilities cannot claim both the Clean Fuel Production Tax Credit 45Z and other specific credits like the Clean Hydrogen Production Tax Credit 45V.

Who is eligible

Clean fuel producers registered with the IRS, with production facilities in the U.S. and its territories, who produce fuel meeting the specified emissions criteria. Producers can include tax-exempt organizations. 

When the credit is available

For qualifying transportation fuel produced on or after January 1, 2025, and sold on or before December 31, 2027.

How to claim the credit

Additional guidance on applying for 2025 tax credits to come. Find more information on this tax credit here.

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.