Clean Fuel Production Credit

The Clean Fuel Production Credit is a newly established income tax credit for clean fuel production, available beginning January 1, 2025. The credit is for clean transportation fuel produced domestically and sold between January 1, 2025 and December 31, 2029. Clean transportation fuel is divided into two broad categories:

sustainable aviation fuel (SAF) and
non-SAF transportation fuel.

Additionally, to qualify for the credit, any clean transportation fuel produced after December 31, 2025 must be exclusively derived from feedstocks either produced or grown in the United States, Mexico, or Canada.

A taxpayer cannot claim a Clean Fuel Production Credit unless the taxpayer is registered as a producer of clean fuel at the time of production.

The credit is equal to the product of:

the applicable amount per gallon (or gallon equivalent) for any transportation fuel that is produced by the taxpayer at a qualified facility, and sold by the taxpayer in a qualified sale during the taxable year, and
the emissions factor for such fuel as determined under the Code.

How to claim the credit

Taxpayers will first need to register using Form 637, Application for Registration (For Certain Excise Tax Activities) under Activity Letter “CA” (producer of SAF) or Activity Letter “CN” (producer of non-SAF transportation fuel), or both, as appropriate.

Taxpayers will then need to file Form 7218, Clean Fuel Production Credit, with their income tax return.