The Internal Revenue Service has issued guidance on the Section 45Z Clean Fuel Production Tax Credit, providing clarification on how farmers and biofuel producers can enhance the value of the credit through qualifying low-carbon agricultural practices.
The guidance, issued in conjunction with an update to the 45Z Clean Fuel Production Tax Credit GREET Model, states that qualifying agricultural practices consistent with technical guidelines released earlier this year by the U.S. Department of Agriculture can be included in calculations for the 45Z credit.
The guidance also establishes transition rules for changes to Section 45Z made by the One Big Beautiful Bill Act. Those changes include a requirement that emissions rates exclude emissions attributable to indirect land use change calculations.
Growth Energy, the nation's largest biofuel trade association, said the guidance will help connect qualifying farm practices with the 45Z tax credit and provide additional clarity on indirect land use change calculations.
The organization said the 45Z credit is driving investments in rural communities and that the new guidance could increase the credit's impact for farmers and biofuel producers.
Source: Growth Energy, "Growth Energy Applauds IRS Guidance and DOE GREET Model Update to Maximize Value of 45Z Clean Fuel Production Credit"