The incentives for biodiesel and renewable biodiesel include: a $1 credit against income tax for every gallon of biodiesel or renewable biodiesel produced; a $1 credit against fuel excise taxes for every gallon of biodiesel or renewable diesel used in producing a biodiesel mixture; and, a 10-cent credit for every gallon produced by a small agri-biodiesel producer. A small agri-biodiesel producer is one with production capacity of less than 60 million gallons per year, and they can claim the 10-cent credit for the first 15 million gallons of agri-biodiesel they produce each year. The credits for biodiesel were created in the American Jobs Creation Act of 2004. Renewable diesel qualified for the credits after passage of the Energy Policy Act of 2005.
The Alternative Fuel Mixture Credit is a $0.50 per gallon credit for producers of P-Series fuels, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, or liquid fuel derived from biomass with gasoline, diesel or kerosene.
The credits have been collectively extended every few years since, most recently in the Inflation Reduction Act of 2022, but are set to expire in 2024. The incentives are now the most expensive item included in the list of recurring energy tax extenders. To learn more, see Taxpayers for Common Sense (TCS) fact sheet here.« Back to Database