IRS Issues Notice on 45Z Clean Fuel Production Tax Credit to Support Domestic Biofuel Production and American Agriculture

September 09, 2026

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(US Treasury Department Internal Revenue Service) The Internal Revenue Service today issued guidance on the Section 45Z Clean Fuels Production Tax Credit to empower America’s crop and livestock farmers, ranchers, and fuel producers across the country and help them access the growing domestic biofuels market in a way that makes the Clean Fuels Production Credit work for them.

“Today's guidance helps America’s farmers, ranchers, and fuel producers access growing opportunities in the domestic biofuels market,” said IRS Chief Executive Officer Frank J. Bisignano. “This guidance helps unlock billions of dollars for America’s agricultural producers, provides greater certainty for investment across rural America, strengthens domestic biofuel production, and helps lower fuel costs for American consumers.”

Notice 2026-53 PDF provides the 2026 emissions rate table used to calculate the clean fuel production credit and provides additional guidance, including on the use of manure-derived fuels and regenerative agricultural practices, supporting American biofuel production.

Notice 2026-53

The Working Families Tax Cuts (WFTC) amended and extended section 45Z, including making several changes that require technical modeling updates to the 45ZCF-GREET model used to determine emissions rates. The section 45Z proposed regulations, which were issued February 4, 2026 and are under final consideration by the IRS and Treasury Department, proposed rules implementing the WFTC changes to the Clean Fuels Production Credit, including addressing how the annual emissions rate tables work and which table and models a producer should use to determine the emissions rate of a particular fuel.

Today’s notice provides certain technical modeling language used to implement WFTC-mandated model updates for manure-derived fuels. This notice addresses how producers should account for WFTC changes when using the emissions rate table and allowed models. The DOE is developing corresponding updates to the 45ZCF-GREET model.

The 45Z proposed regulations indicated that the IRS would provide further guidance on how United States Department of Agriculture (USDA) rules on regenerative agricultural practices will be integrated into the 45ZCF-GREET model once the USDA finalized its rules, which USDA did on June 29, 2026. This notice provides a safe harbor that will be available for 2025 clean fuel production.

The notice also provides transition rules for applying changes made by the WFTC when an allowed methodology has not yet been updated to reflect those changes, including rules addressing used cooking oil and other feedstocks. Among other changes, the law:

Requires emissions rates to exclude emissions attributable to indirect land use change;
Limits eligible transportation fuel to fuel derived exclusively from feedstocks produced or grown in the United States, Mexico or Canada;
Prohibits negative emissions rates, except for transportation fuel derived from animal manure; and
Requires distinct emissions rates for transportation fuels derived from specific animal manure feedstocks.

Background

The Clean Fuel Production Tax Credit, as modified by the WFTC, provides a tax credit for eligible clean transportation fuels produced domestically and sold in a qualified sale, including sustainable aviation fuel and other clean fuels. The credit amount generally depends on a fuel's lifecycle greenhouse gas emissions rate, with lower-emission fuels qualifying for larger credits.

Today's notice provides the 2026 emissions rate table used to calculate the credit and allows certain regenerative agricultural practices and farm-specific manure management practices to be reflected in emissions calculations, helping agricultural producers participate in the growing domestic biofuels market.

For agricultural feedstocks, the guidance allows taxpayers to account for qualifying low-carbon agricultural practices consistent with the U.S. Department of Agriculture’s technical guidelines and the 45Z-specific Feedstock Carbon Intensity Calculator. The guidance also provides transition relief for fuel produced in 2025 and 2026 from certain requirements relating to the development of a nutrient budget before nutrients are applied.

The guidance provides for distinct emissions rates for transportation fuel derived from specific animal manure feedstocks, as required by the WFTC. The 2026 emissions rate table includes dairy manure and swine manure, and Treasury and IRS anticipate that the 45ZCF-GREET model will be updated later in 2026 to include poultry manure and beef manure as primary feedstocks. The guidance also allows farm-specific prior manure management practices to be taken into account in certain circumstances, allowing emissions calculations to better reflect conditions on individual farms. READ MORE

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Notice 2026-53: 2026 emissions rates tables for section 45Z clean fuel production credit; guidance on use of manure-derived fuels and regenerative agricultural practices (KPMG)
Section 45Z Clean Fuel Credit Guidance: What Notice 2026-53 Means for Producers (Forvis Mazars)
IRS issues clean fuel credit guidance for RNG producers -- The American Biogas Council says the new rules provide the certainty needed to restart investment in new projects. (Waste Today)
Guidelines To Determine Life Cycle Greenhouse Gas Emissions of Clean Transportation Fuel Production Pathways Using 45ZCF-GREET Rev. September 2026 (U.S. Department of Energy)
IRS Issues Long-Awaited 45Z Guidance -- IRS Releases 45Z Guidance, Rewarding Regenerative Agriculture, Manure-Based Fuels (DTN Progressive Farmer)
Latest 45Z move helps farmers but 'book and claim' needed, groups say (Agri-Pulse)
45Z Playbook Panel at ACE Conference (Energy.AgWired.com; includes AUDIO)
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Pivot Bio Applauds Treasury, IRS, DOE and USDA for Completing Guidance That Makes the 45Z Clean Fuel Production Tax Credit Work for American Farmers (Pivot Bio/Business Wire/Voice of Alexandria)
Why ag groups want book-and-claim system for 45Z biofuel credit (Agri-Pulse)
Preparing For Feedstock Traceability: What Biofuel Producers Need To Do Now (Ethanol Producer Magazine)

Excerpt from DTN Progressive Farmer: In particular, the guidance gives special treatment to manure-based fuels, rewards regenerative agriculture and limits the use of foreign feedstocks in fuels that generate the credit. In addition, the U.S. Department of Energy released an updated Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model this week.

The IRS is giving special relief for 2025 and 2026 crops that were planted prior to the agency guidance, noting in the guidance, "for fuel produced in 2025 and 2026, the requirements (under the law) regarding the pre-application development of a nutrient budget are deemed satisfied for purposes of 45Z."

The IRS makes clear that taxpayers will have to prove any regenerative agriculture claims with actual evidence.

"A taxpayer must be able to substantiate the application of any nutrients (such as nitrogen, phosphorus and potassium) and measurable nutrient sources and removals that the taxpayer inputs into 45ZCF FD-CIC," the IRS said in the guidance.

"A taxpayer must also keep records sufficient to substantiate its claim for the 45Z credit."

Taxpayers qualify for the 45Z using only farming practices identified by USDA in its technical guidelines, the IRS said. Those practices include cover crops, no-till or reduced tillage, enhanced nutrient management, nitrogen inhibitors and manure applications.

Farmers will not be penalized for failing to have nutrient budgets prepared in advance for 2025 and 2026, because many crops were planted before USDA finalized its guidelines, the IRS said.

The National Corn Growers Association said on Wednesday the actions will "give safe harbor" to previously recognized on-farm practices in reducing the carbon intensity of fuels.

"We are very pleased to see these agencies reaffirm the positive actions from the administration earlier this year, which recognized the importance of existing regenerative practices," NCGA President Jed Bower said in a statement.

"We have been encouraged by the strong cooperation and emphasis on how this tax credit will benefit the individual farmer throughout the implementation process."

In addition, the IRS guidance excludes indirect land-use change as a factor in calculating carbon emissions for 45Z.

"For taxpayers using a version of the 45ZCF-GREET model that includes ILUC emissions to determine the emissions rate for a transportation fuel produced after Dec. 31, 2025, the ILUC value published in the 45ZCF-GREET model must be subtracted from the total life cycle analysis results (total LCA results)," the IRS said.

ANIMAL MANURE

The IRS said it was updating its emissions model to allow for dairy and swine manure to qualify for the 45Z.

"The Treasury Department and the IRS anticipate that an update to the 45ZCF-GREET model including dairy manure and swine manure as distinct primary feedstocks is forthcoming," the IRS said.

"As such, dairy manure and swine manure are included as primary feedstocks in the 2026 emissions rate table."

As part of that, livestock operations will be allowed to use a farm's actual manure management history instead of relying on a national average when calculating carbon scores.

The IRS notice said, "A taxpayer producing a transportation fuel derived from animal manure may use an alternative fate reflecting farm-specific prior manure management practices for the animal manure from which the taxpayer derived its transportation fuel."

Prior practices include manure storage in uncovered lagoons, deep pits, liquid/slurry, pasture/range/paddock, dry lot and solid storage.

So, if a dairy or swine operation has historically managed manure in a way that led to higher methane emissions, capturing that methane through an anaerobic digester and converting it to renewable natural gas may receive greater recognition in carbon counting.

Those operations, however, will be required to have records to support exactly how manure was handled before a given digester project was implemented.

"A taxpayer that cannot substantiate the farm-specific prior manure management practices of a given farm will not have avoided emissions included in the 45ZCF-GREET model for such farm's portion of the taxpayer's manure inputs," the IRS said.

New farms, however, would not qualify for the farm-specific benefit. The IRS said it was concerned that new livestock facilities could intentionally choose high-emitting manure systems to later create larger carbon reductions.

In addition, the IRS guidance said manure-based fuels qualify for negative emissions rates after Dec. 31, 2025.

Patrick Serfass, executive director of the American Biogas Council, said in a statement the IRS guidance was much needed.

"Since Congress created 45Z four years ago, the biogas industry has been waiting for the certainty needed to fully put this tax credit to work," he said.

"Billions of dollars of potential investment have been sidelined in recent years while companies waited to understand how 45Z would apply to their projects. Today's guidance provides a path to move that investment forward, build new biogas systems and turn more of the organic waste produced in our communities into domestic renewable fuel."

FOREIGN FEEDSTOCKS

The IRS guidance said transportation fuel produced after Dec. 31, 2025, must be exclusively derived from feedstocks grown in the U.S., Mexico or Canada to qualify for the 45Z.

"The Treasury Department and the IRS remain concerned about the ability to reliably distinguish between imported used cooking oil and palm oil, and the resulting risk of crediting ineligible fuels," the IRS said in its guidance.

In addition, fuel produced only in 2025 using non-North American used cooking oil imported into the U.S. potentially qualifies for the 45Z, according to the guidance, using the "applicable pathway." READ MORE

Excerpt from Energy.AgWired.com: A big focus of last week’s American Coalition for Ethanol 39th annual conference was on the 45Z clean fuel production tax credit, with the final panel on Friday serving up an overview of policy, modeling, and compliance for biofuel producers.

USDA released its final guidelines for the production of regenerative agricultural biofuel feedstocks in June and Kate Zook, Acting Director of USDA’s Office of Energy and Environmental Policy, explained that it covers corn, soy, sorghum, and spring canola. “The official calculator that is used to calculate the farm scale carbon intensity is USDA’s Feedstock Carbon Intensity Calculator,” said Zook. “It reports out in CO2e per bushel and it contains all the practices and crops with USDA’s rule. So it is meant to work in tandem with USDA’s rule.”

Zook said the Department of Energy still must incorporate the calculator into the GREET model required by statute, and then Treasury must formally cite the USDA regulations. “We know from the regulatory agenda that 45Z is aimed to be finalized in November of this year,” she said. “This is a huge deal. It’s a huge deal for agriculture. If there’s a way that we can pass that value down to the farm and allow the farmer to have some power in this market with their grain, that’s an excellent opportunity.”

Kari Buttenhoff and Jamey Cline, both with Christianson PLLP, provided some insight into the modeling and compliance pieces for ethanol producers, acknowledging that every plant is different and the program is complicated and still not yet finalized. “With different markets comes uncertainty,” said Cline. “And this is exacerbated by the fact we don’t have a final rule for 45Z and have sought interpretation for very complex regulations since they were released. The industry is having to comply with a new regulation that doesn’t have all the rules down yet on paper, nor are they fully understood. In fact, because the market was being developed in real time, pricing and other benefits had to be developed.”

Listen to the panel conversation:
The 45Z Playbook: Policy, Modeling, and Compliance for Biofuel Producers – panel
Kate Zook, Acting Director, Office of Energy and Environmental Policy, USDA
Kari Buttenhoff, Christianson
Jamey Cline, Partner, Christianson PLLP
Play 45Z Playbook panel 54:44 READ MORE

Excerpt from Fence Post: Growth Energy said in its analysis, “Specifically, the guidance stipulates that qualifying low-carbon agricultural practices consistent with the technical guidelines released earlier this year by the U.S. Department of Agriculture can be used in the calculation of the 45Z credit.”

“The guidance also provides transition rules for applying changes made to 45Z by the One Big Beautiful Bill Act, including a requirement that emissions rates exclude emissions attributable to flawed, outdated, and inaccurate indirect land use change (ILUC) calculations,” Growth Energy said.

“Farmers and biofuel producers asked and the Trump administration has delivered,”said Growth Energy CEO Emily Skor.

“The 45Z tax credit is already driving significant investments in rural communities across the U.S., but this guidance is the key to ensuring farmers reap the benefits of the credit. We can’t wait to see how this new guidance accelerates the credit’s impact across rural America.” READ MORE

Excerpt from Pivot Bio/Business Wire/Voice of Alexandria: Pivot Bio, one of the world’s leading agtech companies, today applauded the U.S. Department of the Treasury, the Internal Revenue Service, the U.S. Department of Energy and the U.S. Department of Agriculture for taking the next steps to make the 45Z Clean Fuel Production Tax Credit fully operational for fuel producers who source feedstocks grown with regenerative agriculture practices.

On September 8, the Treasury and the IRS issued a notice formalizing the incorporation of USDA’s Feedstock Carbon Intensity Calculator into 45Z. In parallel, the Department of Energy released an updated 45ZCF-GREET model and user manual that includes the USDA calculator. Together, the two actions allow taxpayers to begin claiming the credit now, including ethanol made from corn grown using on-farm practices such as Pivot Bio’s nitrogen-fixing microbial products.

“This is a huge win for American farmers, for the biofuels industry and for U.S. energy security,” said Chris Abbott, chief executive officer of Pivot Bio. “Most importantly, 45Z gives farmers another opportunity to get more value from every acre. When a grower reduces conventional nitrogen, that decision now shows up in the carbon intensity score, and that value can find its way back to the farm gate. We are grateful to Treasury, the IRS, the Department of Energy and USDA for their continued focus on the American farmer and unlocking new technology, innovation and tools to help them be more successful.”

The 45Z guidance formally adopts the nitrogen use efficiency method USDA proposed earlier this year. A feedstock grower enters the total amount of synthetic nitrogen fertilizer used in producing that feedstock. Because Pivot Bio’s PROVEN® G3 allows corn growers to replace their use of synthetic nitrogen, it lowers the carbon intensity score in the approved calculator.

The guidance covers fuel produced in both 2025 and 2026, meaning early adopters who put these practices in place before the formal rules were published are not left behind. Treasury also included a transition accommodation for both years, treating the pre-application nutrient budget requirement as satisfied for crops planted before USDA finalized its guidelines.

“Aligning Treasury, DOE and USDA on how regenerative agriculture is calculated has been a long time in the making, and it took real persistence from staff across all three agencies,” said Marty Muenzmaier, director of environmental policy and programs at Pivot Bio. “The IRS notice paired with the updated model is sufficient authority for taxpayers to rely on and claim the credit today. A final 45Z rule is still expected later this year, but producers who are using Pivot Bio do not need to wait for it to begin participating.”

The updated model is available from the Department of Energy, and the IRS notice is available here.

Pivot Bio, one of the world’s leading agtech companies, delivers patented crop nutrition technologies that harness the power of nature to help farmers reliably and productively grow the food the world needs in the face of increasing volatility. Currently available in North America and soon in Brazil, the company’s products represent a breakthrough innovation and one of the agriculture industry’s most promising solutions. Pivot Bio has been recognized three times by TIME magazine on its annual list of Best Inventions, by Fast Company on its World Changing Ideas and World’s 50 Most Innovative Companies lists, by CNBC on its Disruptor 50 list, by Fortune on its Impact 20 list, and by MIT Technology Review as one of 15 climate tech companies to watch. For more information, visit PivotBio.com. READ MORE