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
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