The Inflation Reduction Act created a new tax credit of up to $1.75 per gallon for sustainable aviation fuel. The credit begins on January 1, 2023, and ends on December 31, 2024. Thereafter, a new “clean fuel” tax credit is due to begin in 2025, providing similar subsidies for sustainable aviation fuel. Fuels qualifying for the sustainable aviation fuel credit must reduce lifecycle greenhouse gas emissions by at least 50 percent as compared to petroleum-based jet fuel. While palm oil and petroleum-based fuels are disqualified from tax credit eligibility, a wide range of other types of biomass-based fuels could qualify for federal tax credits, potentially distorting markets and resulting in unintended consequences for the environment.
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Program
Committees of Jurisdiction
Sustainable Aviation Fuel Credit
Category
Energy - Alternative
Subsidy Type
Tax Expenditure
House Committee on Ways and Means, Senate Finance Committee
$0
FY 23 Budget Score (in mil.)
$49
FY 23-32 Budget Score (in mil.)