First established under the Inflation Reduction Act of 2022, the Sec. 45Z Clean Fuel Production Credit provides businesses with an income tax credit for clean transportation fuel produced domestically after December 31, 2024, and sold by December 31, 2029, as extended by the One Big Beautiful Bill Act (OBBBA). The credit is triggered upon sale of the qualified fuel to an unrelated person.

In February 2026, Treasury and IRS published proposed regulations for domestic producers of clean transportation fuel to determine their eligibility for and calculation of the Sec. 45Z credit. The proposed regulations provide guidance on the determination of clean fuel production credits, emissions rates, and certification and registration requirements. They provide further certainty and clarity for taxpayers and address key issues raised by stakeholders.

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