The IRS on July 21 published a notice announcing the 2025 calendar-year inflation adjustment factor for the Section 45Z clen fuel production credit. The resulting adjustment boosts maximum the value of the credit by approximately 6%.
The law establishing the 45Z credit includes language implementing an inflation adjustment for years beginning after 2024. The value of the credit, currently set at up to $1 per gallon for non-aviation transportation fuels and up to $1.75 per gallon for sustainable aviation fuel (SAF), is to be adjusted using the inflation adjustment factor, as determined by the IRS. While the One Big Beautiful Bill, signed by President Donald Trump on July 4, included language capping the value of 45Z at $1 per gallon for all fuels, including SAF, that change does not take effect until Jan. 1, 2026.
For transportation fuel sold in calendar year 2025, the IRS has calculated the inflation adjustment factor to be 1.0611. As a result, the taxpayers can claim up to $1.06 per gallon for eligible non-SAF fuels and up to $1.86 per gallon for eligible SAF.
Originally shared by Biodiesel Magazine. Article title updated for purpose.
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