Nebraska SAF tax credit signed into law

Nebraska Gov. Jim Pillen signed legislative bill 937 (LB937) into law April 24, a large revenue and taxation bill that includes a tax credit for sustainable aviation fuel (SAF).

The value of the base tax credit to SAF producers is 75 cents per gallon for SAF that meets a 50 percent reduction in greenhouse-gas (GHG) emissions compared to petroleum-based jet fuel.

A supplemental credit of 1 penny will be provided for every percentage point of GHG reductions beyond 50 percent for a total maximum credit of $1.25 per gallon.

The GHG emissions can be calculated using either the International Civil Aviation Organization’s CORSIA methodology or Argonne National Laboratory’s GREET model.

A qualified mixture means a mixture of SAF and kerosene if the mixture is produced by the taxpayer in the United States, used by the taxpayer or sold by the taxpayer for use in an aircraft, and the transfer of the mixture to the fuel tank of aircraft occurs in the United States.

According to the bill, the SAF must meet the requirements of ASTM D7566 or the Fischer-Tropsch provisions of ASTM D1655.

To be eligible for the credit, the SAF may not be produced from coprocessing with petroleum materials and cannot be made from palm oil or palm derivatives.

According to the bill, applicable materials from which eligible SAF can be made include monoglycerides, diglycerides and triglycerides; free fatty acids; and fatty acid esters.

The legislation indicates that the state department of revenue may approve SAF tax credits each fiscal year until the total amount of credits approved for that fiscal year reaches $500,000.

The tax credit goes into effect Jan. 1, 2027, and sunsets Jan. 1, 2035.

A producer of SAF can only claim the credit for up to five taxable years, according to the legislation.

Click here to read the full bill.