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December 15, 2023

IRS issues guidance on IRC Section 40B sustainable aviation fuel credit

The IRS today released guidance (Notice 2024-6) on the new sustainable aviation fuel credit created by the Inflation Reduction Act for qualifying fuel mixtures containing sustainable aviation fuel for certain sales in calendar year 2023 and 2024. To qualify for the initial credit of $1.25 per gallon of aviation fuel, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. For each percentage that the lifecycle greenhouse gas reduction exceeds 50%, there is a supplemental credit of one cent for a maximum increase of $0.50 per gallon. The Notice specifies the methods for calculating lifecycle greenhouse gas emissions; as well as safe harbors using the Environmental Protection Agency's Renewable Fuel Standard (RFS) program and related guidance. A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Chris DeZinno, legal editor