Section 13201 of the IRA extends the biodiesel and renewable diesel tax credit, biodiesel mixture tax credit, alternative fuel tax credit, and alternative fuel mixture tax credit in section 40A of the IRC. The biodiesel, renewable diesel, and biodiesel mixture credits were previously due to expire on December 31, 2022 but have been extended through December 31, 2024. Biodiesel fuel and fuel mixture producers that either use the product in a trade or business, or sell the product to a buyer at retail and place it in the fuel tank of the buyer’s vehicle, are eligible for the credit.
Section 13201 includes a special rule on allowing taxpayers to receive the alternative fuel credit provided in section 6426(d) of the IRC, provided it is properly determined during the first, second, and third quarters of 2022 (i.e., between January 1, 2022 to September 30, 2022). Prior to the enactment of the IRA, the alternative fuel and alternative fuel mixture credits expired on December 31, 2021. The IRA extends the credit to December 31, 2024.
The alternative fuel credit is described in section 6426(d) as the product of 50 cents and the number of gallons of an alternative fuel or gasoline gallon equivalents of a non-liquid alternative fuel, sold by the taxpayer for use a fuel in a motor vehicle, motorboat, or for aviation, or used by the taxpayer for the same purpose. The credit can be claimed against the excise tax on diesel fuel and alternative fuel under section 4041 of the IRC.
The Treasury Department must issue guidance on the issuance of credits within 30 days from the enactment of the IRA.