Agency: Department of the Treasury
Description:
Tax credit of $1/gallon for biomass-based diesel (biodiesel and renewable diesel) fuel, plus tax credit for alternative fuels
Bill Section:
13201
US Code:
26 USC 40A
New or Existing:
Existing
Potential Cost:
$5,600,000,000
Timeline:
Calendar years 2023-2024, with costs incurred in FY23-25
Implementation Status/Rulemaking:
On September 13, 2022, the Internal Revenue Service released Notice 2022-39, providing rules for claiming the alternative fuel credit for sales and purchases made in the first three calendar quarters of 2022: Source
TCS Notes:
Most biomass-based diesel is derived from soybeans, a food-based crop. Federal supports for biodiesel, such as this tax credit, are duplicative of Renewable Fuel Standard (RFS) mandate which requires U.S. biofuel consumption. There are also no GHG emission reduction requirements. The estimated cost in FY23 is $2.8 billion.