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Treasury says 45Z tax guidance coming before new Trump administration

A U.S. Treasury official says renewable fuels producers will be able to take advantage of sustainable aviation fuel tax credits in 2025.

Treasury spokesman Michael Martinez tells Brownfield, “Treasury anticipates issuing guidance before the end of the (Biden) Administration that will enable eligible producers to claim the 45Z credit for 2025.”

Although there will still be work ahead on the tax credits, Martinez says the upcoming guidance will allow use of the tax credits next year, contradicting a recent report from a news service.

Renewable Fuels Association Senior Vice President Troy Bredenkamp tells Brownfield he’s not surprised by reports that a full-fledged 45Z regulation won’t be finalized by Inauguration Day, but a full-blown rulemaking may not be necessary at this time.  “We are pleased that the administration officials that we still talk to are still telling us that they intend to issue guidance that will allow producers to demonstrate sufficient detail and ways to claim the credit for the 2025 tax year.”

Bredenkamp says it is important that the Treasury’s guidance contains sufficient detail for biofuel producers to clearly determine eligibility and claim the appropriate credit value for the 2025 tax year, and he expects biofuel supporters will weigh in with the Trump administration about the importance of 45Z. “And so, when they’re making those cuts to the Inflation Reduction Act, which everyone I think is anticipating, that 45Z is one of those tax credit programs that isn’t left on the cutting room floor.”

Bredenkamp says many biofuel producers are waiting before investing in sustainable aviation fuel. “There are those folks that have already invested. There are plenty of folks that are waiting to see how this actually shakes out before they put the real steel in the ground, so to speak, and it really does come down to what is the Trump Administration going to do with 45Z?”

Bredenkamp also says it is critically important that the U.S. Treasury’s guidance provides safe harbor for taxpayers claiming the credit, and that credits claimed for 2025 cannot be clawed back if additional 45Z regulations are adopted in the future.

The 45Z credits were created by the Inflation Reduction Act and will provide up to a dollar per gallon credit for transportation fuel and $1.75 per gallon credit for sustainable aviation fuel for reducing greenhouse gases.

Audio: Troy Bredenkamp discusses the importance of the 45Z tax credits, and his observations as the industry awaits guidance from the U.S. Treasury Department.