Biodiesel Mixture Excise Tax Credit

NOTE: This incentive was originally set to expire on December 31, 2022, but has been extended through December 31, 2024, by Public Law 117-169.

A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. Only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit. The incentive must first be taken as a credit against the blender’s fuel tax liability; any excess over this tax liability may be claimed as a direct payment from the IRS. Claims must include a copy of the certificate from the registered biodiesel producer or importer that: identifies the product; specifies the product’s biodiesel, agri-biodiesel, and/or renewable diesel content; confirms that the product is properly registered as a fuel with the U.S. Environmental Protection Agency; and confirms that the product meets the requirements of ASTM Standard D6751. Renewable diesel is defined as liquid fuel derived from biomass that meets EPA’s fuel registration requirements and ASTM Standards D975 or D396; the definition of renewable diesel does not include any fuel derived from co-processing biomass with a feedstock that is not biomass.

For more information about claiming the credit, see IRS Form 4136, which is available on the IRS Forms and Publications website.

(Reference 26 U.S. Code 6426 and Public Law 117-169)