Treasury, IRS issue guidance on 45Z clean fuel production credit

The U.S. Department of the Treasury and Internal Revenue Service issued Notice 2024-49 for the 45Z clean fuel production credit May 31.

The Inflation Reduction Act allows a credit for the production of clean transportation fuels beginning Jan. 1, 2025.

For purposes of the clean fuel production credit, transportation fuel is divided into two broad categories of fuel: Sustainable aviation fuel (SAF) and non-SAF transportation fuel.

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 during the taxable year and the emissions factor for such fuel as determined under the code.

One of the requirements to qualify for the credit is that the fuel producer must be registered at the time the fuel is produced.

The notice emphasizes this point and encourages fuel producers who may be eligible for the credit to apply for registration as soon as possible.

The May 31 notice provides guidance for registering for both SAF and non-SAF production and provides background on the credit.