Alternative Fuel Mixture Excise Tax Credit

NOTE: This incentive was originally set to expire on December 31, 2021, but has been extended through December 31, 2024, by Public Law 117-169.

An alternative fuel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive on the sale or use of the alternative fuel blend (mixture) for use as a fuel in the blender’s trade or business. The credit is in the amount of $0.50 per gallon of alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene. Qualified alternative fuels are P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and liquid fuel derived from biomass. The incentive must be taken as a credit against the blender’s alternative fuel tax liability. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.

For more information about claiming the credit, see IRS Form 720, which is available on the IRS Forms and Publications website.

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