With today’s passage of the One Big Beautiful Bill Act, the Renewable Fuels Association applauded the inclusion of several key tax provisions that will enhance the role of the U.S. ethanol industry in contributing to American energy security and innovation.
“From the very beginning of the budget reconciliation process, our goal was to advocate for the inclusion of tax policies that provide certainty, growth opportunities, and market stability for U.S. ethanol producers. The One Big Beautiful Bill Act passed today accomplishes that objective. We thank the many renewable fuel supporters in Congress and President Trump for ensuring American ethanol producers and farmers had a voice and seat at the table in this process,” said Geoff Cooper, RFA President and CEO. “The extension and modifications to the 45Z clean fuel production credit, reinstatement of the Research and Development immediate expensing provisions, and improvement of the 45Q carbon sequestration and utilization credit will provide a growth-oriented tax policy climate that ethanol producers can count on, improving the role that renewable fuels can play in helping reach our nation’s energy independence goals.”
Specifically, the OBBBA includes the following improvements to the 45Z Clean Fuel tax provision:
- Extends 45Z by two years, to the end of 2029.
- Restricts eligibility for 45Z to fuels made from feedstocks grown in the U.S., Canada, and Mexico.
- Retains full transferability throughout the term of the 45Z credit.
- Harmonizes indirect land use change emissions with actual data and evidence, resulting in zero ILUC penalty for corn ethanol.
Other key ethanol-related provisions in the budget reconciliation package include:
- Retains key enhancements to 45Q previously made in the Inflation Reduction Act and allows other carbon uses like enhanced oil recovery to qualify for equal credit values.
- Reinstates RD/RE immediate expensing provision that expired in 2022 under the Tax Cuts and Jobs Act.
“With budget reconciliation now in the rearview mirror, RFA, along with Congress and the Trump Administration, can now turn our attention to other key priorities to U.S. ethanol producers, such as legislation allowing for year-round E15 along with boosting the role of renewable fuels through robust renewable volume obligations under the RFS and a judicious resolution to the mounting number of pending Small Refinery Exemption petitions,” said Cooper.
