Section 45Z is the federal income-tax credit for clean transportation fuel produced in the United States. The description of eligibility and the emissions formula below is from IRS Notice 2026-53, effective on and after September 8, 2026, unless another link is given.
The credit applies to fuel produced domestically after December 31, 2024, and sold by December 31, 2029. Notice 2026-53 says the One, Big, Beautiful Bill Act, section 70521, extended the credit past the former sunset at the end of 2027.
The emissions test
The fuel’s emissions rate has to be no more than 50 kilograms of CO2 equivalent per mmBTU. The emissions factor is (50 minus the rate) divided by 50. A higher-carbon fuel inside that cap earns a smaller credit. A fuel at the 50-kilogram line earns nothing from the formula.
For fuel that is not sustainable aviation fuel, the lifecycle rate uses the Greenhouse gases, Regulated Emissions, and Energy use in Technologies model, including the 45ZCF-GREET version. The Department of Energy’s model page is GREET. For sustainable aviation fuel, Notice 2026-53 points to the CORSIA methodology, or a similar methodology under Clean Air Act section 211(o)(1)(H), as that methodology stood on August 16, 2022.
For fuel produced after 2025, the notice says the rate excludes indirect land-use change. The rate cannot be below zero, except for an animal-manure feedstock.
Dollar amounts
Proposed regulations published February 4, 2026, spell out the statutory amounts after the 2025 changes. For fuel produced after December 31, 2025, the applicable amount is $0.20 per gallon, or $1.00 per gallon if the prevailing-wage and apprenticeship requirements are met. The citation in the preamble is section 70521(g)(2) of the One, Big, Beautiful Bill Act. The old sustainable-aviation-fuel amounts of $0.35 and $1.75 apply only to fuel produced on or before December 31, 2025. The credit is rounded to the nearest cent.
In those proposed rules, sustainable aviation fuel means fuel that meets ASTM D7566, or the Fischer-Tropsch provisions of ASTM D1655 Annex A1. Palm fatty acid distillates and petroleum do not qualify as the feedstock for that definition. Source: Federal Register, February 4, 2026, section 45Z clean fuel production credit.
A draft inflation adjustment
Draft instructions for Form 7218, marked “Rev. December 2026,” apply a 2026 inflation factor of 1.0929 and show $0.22 and $1.09 per gallon. The draft points to Notice 2026-41 in Internal Revenue Bulletin 2026-29. This site has not separately read Notice 2026-41. Treat $0.22 and $1.09 as figures printed in a draft form instruction, not as a final inflation adjustment, until that notice is in hand. Source: Draft Instructions for Form 7218.
The $1-a-gallon biodiesel and renewable diesel blender’s credit is a different provision. It is not 45Z. Company filings describe that blender’s credit as having expired on December 31, 2024. The production credit above is the one that replaced that role for fuel sold in later years.