Treasury, IRS issues guidance on new SAF tax credit

December 27, 2022

BY U.S. Treasury Department

The Treasury Department and Internal Revenue Service on Dec. 19 issued a notice regarding the sustainable aviation fuel (SAF) credit. This is a new credit created by the Inflation Reduction Act of 2022. It applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024.

Notice 2023-06 explains the requirements for the fuel to be eligible for the SAF credit, the various methods in which a claimant may claim the credit, and which parties must be registered for the different activities in the process. The notice also asks for public comments on various aspects of the statute, which will help Treasury and IRS in developing additional guidance.

The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50 percent in lifecycle greenhouse gas emissions. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50 percent. The notice provides a safe harbor for calculating the lifecycle greenhouse gas emissions reduction percentage.

Finally, the notice explains that a claimant may choose how to claim the Sustainable Aviation Fuel Credit. The first is through the excise tax system. The second is a general business credit that is nonrefundable and must be included in income. Notice 2023-06 also clarifies what constitutes sustainable aviation fuel and a qualified mixture. 

Advertisement

Advertisement

 

 

Advertisement

Advertisement

Related Stories

The European Commission on July 18 announced its investigation into biodiesel imports from China is now complete and did not confirm the existence of fraud. The commission will take action, however, to address some systemic weaknesses it identified.

Read More

Kintetsu World Express Inc. has signed an additional agreement with Hong Kong, China-based Cathay Pacific Airways for the use of sustainable aviation fuel (SAF). The agreement expands a three-year partnership between the two companies.

Read More

On July 18, U.S. EPA announced a reduction in force (RIF) as the agency continues its comprehensive restructuring efforts. With organizational improvements, EPA is delivering $748.8 million in savings.

Read More

Broco Energy on July 17 announced a new partnership with the Massachusetts Port Authority (Massport) to deliver and transition Massport's fuel tanks to renewable diesel across its various facilities.

Read More

Shell Aviation, Accenture, and Amex GBT on July 10 announced Avelia is in the process of evolving to an industry solution with independent data hosting and a multi-supplier model helping users access the GHG benefits of SAF.

Read More

Upcoming Events

Sign up for our e-newsletter!

Advertisement

Advertisement