Overview
- Treasury and the IRS issued proposed regulations on February 3, 2026 (REG-121244-23) for the technology‑neutral Section 45Z credit for low‑GHG transportation fuels produced from 2025 through 2029, generally worth up to about $1 per gallon based on lifecycle emissions.
- The proposal broadens qualified sales to include wholesalers, intermediaries, and certain related‑party look‑through transactions, and credits are claimed in the taxable year of the qualifying sale.
- Producers must use the most current 45ZCF‑GREET model each year, which excludes indirect land‑use‑change emissions and will credit specified climate‑smart agricultural practices, with no grandfathering of earlier models.
- The rules define who is a producer and what constitutes a facility, treat certain carbon‑capture equipment as part of a facility, and prevent double‑claiming by prohibiting 45Z and 45Q credits for the same facility in the same year.
- The package sets detailed certification and recordkeeping requirements, outlines a narrow DOE‑run provisional emissions rate process, allows reliance until finalization, applies the emissions‑table guidance to years ending on or after January 10, 2025, keeps comments open through April 6 with a May 28 hearing, and clarifies via Sections 6417/6418 that ownership is not required to elect direct pay or transfer.