Federal Tax Credits · Clean Fuel · FED-FUEL-001
Clean Fuel Production Credit (Internal Revenue Code §45Z)
Publication revised September 24, 2026. Sourcebook page 17.
Credit amount / calculation
Per-gallon or gallon-equivalent credit based on the applicable amount and lifecycle emissions factor; qualifying fuel must be sold by December 31, 2029.
Business fit and eligible activity
Potentially relevant only if a forest-products business actually produces qualifying transportation fuel. Selling chips, pellets or boiler fuel does not itself qualify. Qualifying production, feedstock or energy technology; ordinary wood residuals are not automatically eligible.
Illustrative business benefit
Calculation illustration only: 100,000 qualifying gallons at an assumed final credit rate of $0.50 per gallon would produce $50,000. The assumed rate is not a statutory entitlement; calculate the actual rate from the applicable amount, emissions factor and labor rules.
Timing / first action
Seek approval before signing a purchase order, contract, lease or other binding commitment. Producer registration must be effective at production; credit currently extends through fuel sold by Dec. 31, 2029. Confirm the exact point at which a purchase order, contract, lease, or other binding commitment would make the project ineligible.
Official sources
Related programs
Carbon Oxide Sequestration Credit (Internal Revenue Code §45Q)
Per-metric-ton credit
Calculation illustration only: 10,000 verified eligible metric tons multiplied by an assumed applicable rate of $85 per ton would give $850,000.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Clean Electricity Production Credit (Internal Revenue Code §45Y)
Production-based
Alternative to the investment credit for owners/operators of qualifying clean-electricity facilities; potentially relevant to qualifying on-site generation.
Port Credit
Discretionary credit based on increased cargo
A manufacturer increasing cargo through an Alabama public port may receive a credit tied to port usage and economic activity.
Qualified Facility Income Tax Credit
Lesser of
A qualifying manufacturing facility can receive a substantial credit tied to capital investment and jobs/wages after Arizona Commerce Authority approval.
Arkansas Wood Energy Products and Forest Maintenance Credit
20% of qualifying wood-energy equipment costs for tax years
Rare forest-specific credit for very large projects producing qualifying wood-energy products from forest residues.