IRS Releases Additional Guidance on Aviation Fuel


The Internal Revenue Service (IRS) on Apr. 30 released additional guidance governing the implementation of the Section 40B blenders’ tax credit for sustainable aviation fuel (SAF).

The credit, which was enacted as a part of the Inflation Reduction Act of 2022, provides a per-gallon credit for SAF up to $1.75 in 2023 and 2024. The latest guidance outlines a new methodology that SAF producers can use to calculate the lifecycle greenhouse gas (GHG) emissions of their fuel. The new methodology, which is based on the Argonne National Laboratory’s GREET (Greenhouse gases, Regulated Emissions, and Energy use in Technologies) model, will likely allow additional feedstocks like corn and soy to qualify for the credit.

The 40B credit is scheduled to expire at the end of 2024 and be replaced by the Section 45Z Clean Fuels Production credit beginning in 2025. NATSO previously urged the IRS in multiple comment letters to ensure that any methodology used to calculate the value of the 40B credit meets stringency requirements established under the law.

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