Ways and Means Releases "The One, Big, Beautiful" Tax Package

May 13, 2025

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(Kutak Rock) On May 12, the House Ways and Means Committee released a complete copy of its draft tax reform legislation. You can find it here. The Ways and Means Committee will hold a “mark-up” session on May 13, at 2:30 p.m. (ET).

The legislation, entitled “The One, Big, Beautiful Bill,” generally breaks down into three major categories: extensions of the 2017 Tax Cuts and Jobs Act, Presidential campaign priorities, and offsets (many of which are achieved by repealing Inflation Reduction Act energy tax policies).

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The legislation will be subject to amendment tomorrow (May 13, 2025) during the Ways and Means Committee mark-up session. After passage, it will go to the Budget Committee, likely by week end. We anticipate it then going to the Rules Committee early next week, where it will again be subject to change. While leadership is targeting next week for passage out of Rules, it is possible that ongoing negotiations could delay its passage and delivery to the House Floor. Upon reaching the House Floor, the legislation will be subject to revision yet again. We feel well positioned; however further advocacy and engagement could be required. READ MORE

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Chart from Clean Energy Business Network

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Excerpt from Ethanol Producer Magazine: The House Ways and Means Committee and House Committee on Energy and Commerce on May 12 released draft proposals for their respective portions of a reconciliation budget package, referred to by President Donald Trump as the “big, beautiful bill.”

Language related to the 45Z credit is included in the proposal released by the House Ways and Means Committee. Provisions included in the draft bill would limit eligibility for the credit to fuels made using feedstocks produced or grown in the U.S., Mexico and Canada.

The bill would also change how lifecycle greenhouse gas (GHG) emissions are calculated for purposes of the 45Z credit by excluding any emissions associated with indirect land use change.

In addition, the draft bill would extend the 45Z credit through the end of 2031. The credit is currently scheduled to expire on Dec. 31, 2027.

"As the budget reconciliation process moves along, we are encouraged to see the inclusion of important tax provisions in the House Ways and Means Committee text released today,” said Geoff Cooper, president and CEO of the RFA. “The draft language would extend the 45Z clean fuel production credit by four years, while also reinstating crucial tax benefits related to research and experimentation. These tax policies can help support expanded production of American energy, accelerate technology innovation, and boost rural economies by creating manufacturing jobs and opening new markets for America's farmers." READ MORE

Excerpt from DTN Progressive Farmer: Multiple House committees this week are scheduled to mark up and vote on a budget-reconciliation bill that would primarily extend President Donald Trump's tax-cut package from his first term. The legislation is expected to cut spending in several areas, such as rolling back large pieces of the 2022 Inflation Reduction Act passed by Democrats.

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The House Energy and Commerce Committee on Tuesday will vote to rescind several provisions of the Inflation Reduction Act meant to spur renewable energy or reduce greenhouse gas emissions. As part of that package, Energy and Commerce also will vote to repeal higher fuel-efficiency standards for semi-trucks, pickups and passenger cars set by the Biden administration. That committee will also detail ways to cut Medicaid costs....

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Key provisions in the tax bill that would affect farmers include:

45Z EXTENSION

Biofuel producers haven't had much of a chance to take advantage of the Clean Fuels Production Credit known as 45Z. Under the bill, the tax credit would be extended until the end of 2031. The bill also modifies the 45Z to prevent the use of certain foreign feedstocks, such as used cooking oil from China. Fuels for the tax credit under the bill would be limited to feedstocks produced or grown in the United States, Canada or Mexico. The bill would also limit federal agencies from attributing any greenhouse gas emissions to "indirect land use change." There is also a special provision that opens up the 45Z tax credit to transportation fuels derived from animal manure.

TAX RATES

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STATE AND LOCAL TAXES (SALT) DEDUCTION READ MORE

Excerpt from E&E Daily: The plan would get rid of tax credits for electric vehicles buyers and hydrogen producers by the end of the year. It would phase out incentives for advanced manufacturing and nuclear power production. And it would end the practice known as “transferability,” which allows project sponsors to transfer the credit to a third party and is often used in finance agreements.

Spared from the knife were incentives for biofuels and sustainable aviation fuels; in fact, they were extended by four years with lower emission qualifications.

The legislation also includes new domestic sourcing requirements intended to disqualify companies tied to China and other foreign adversaries from accessing the incentives.

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Most environmental groups were aghast at the proposals. Ben Jealous, CEO of the Sierra Club, pointed to a provision that would strip organizations of their tax-exempt status if the administration determined they supported terrorist organizations.

“Allowing any administration to label an American organization it disagrees with or simply does not like as ‘terrorists’ is not just wrong, it is unamerican,” Jealous said in a statement.

Some renewable energy advocates invoked Republican rhetoric in criticizing the legislation. “The Ways and Means bill is at odds with American energy dominance,” said Jason Grumet, CEO of the American Clean Power Association.

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Sen. Ed Markey (D-Mass.) was not as quiet. He chided Republicans, saying they were ceding the clean energy economy to China. READ MORE

Excerpt from E&E Daily: The American Petroleum Institute and dozens of trade groups and hydrogen companies urged congressional leaders to keep the hydrogen production tax credits, or 45V.

“Retaining the 45V incentive without new limitations will drive domestic innovation, manufacturing, and infrastructure development — ensuring America leads in the clean hydrogen economy, rather than ceding ground to strategic competitors,” the letter reads. READ MORE

Excerpt from Carbon Herald: Several changes did make their way into the draft. The first is aimed at limiting those claiming both 45Q and 45V credits from the same facility, while the other prevents the transferability of credits to any “foreign-influenced entity”.

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Sustainable aviation fuel also received a boost with the 45Z credit largely preserved but needing to adapt to stricter IRS rules on emission thresholds and reporting.

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The release of the draft will be seen as a positive sign for both carbon capture and removal in the U.S. With the support of the Inflation Reduction Act (IRA) both approaches have seen substantial growth in the last several years, usually enjoying broad bipartisan support but also seeing unlikely alliances form against them.

In March, Representative Scott Perry, a Republican from Pennsylvania, teamed up with Democrat Ro Khanna of California to introduce the 45Q Repeal Act, with the goal of removing support to carbon capture, utilization, and storage (CCUS).

Despite opposition the industry’s growth has provided a foundation for thinking big, attracting capital and commiting to investments in the 2022-24 period but enthusiasm was dampened in 2025 with concerns about the level of support (or lack thereof) under the Trump administration.

The presence of an almost entirely intact 45Q in this draft does hint at the strength of its supporters. Similar to many of the renewable energy projects supported by the IRA, most of the funds directed towards carbon management have landed in red states. Texas, Louisiana and Wyoming are leading the charge with the latter’s governor placing carbon management at the forefront of his agenda. READ MORE

Excerpt from Ethanol Producer Magazine: While the draft bill updates and extends the 45Z tax credit and leaves the 45Q credit mostly unchanged, it also aims to repeal and scale back numerous other clean energy tax credits, including the clean hydrogen tax credit and the alternative fuel vehicle refueling property credit.

The alternative fuel vehicle refueling property credit allows taxpayers to claim a tax credit for advanced refueling property placed in service during a give tax year, including property used to dispense E85, biodiesel blends of B20 or greater, natural gas, hydrogen, propane, and electricity. The credit value is 30% of the cost of the property, up to $100,000. The credit is currently scheduled to retire on Dec. 31, 2032. The draft bill would accelerate the sunset date of the credit to Dec. 31, 2025. READ MORE

Excerpt from Brownfield Ag News: Brian Jennings with the American Coalition for Ethanol tells Brownfield the prevailing wage and apprenticeship requirements that were tied to most of the Biden era tax credits including 45Z are not feasible. “Potentially, include either an improvement to that prevailing wage and apprenticeship language or eliminating that requirement alltogether. That’s a conversation we’ll be having with the House and with the Senate.”

Geoff Cooper with the Renewable Fuels Association agrees and says he would also like to see the transferability of the credit go beyond 2027 to help smaller producers. He says the bill also doesn’t allow ethanol producers to benefit from conservation practices on the farm as part of the carbon intensity scoring. “And therefore, there’s really no way for ethanol producers to reward farmers for those practices through the existing structure of this tax credit.”

Cooper is hoping these issues can be addressed in the House Budget Committee or in the Senate before the bill is finalized.

Jennings says if the 45Z tax credits are available, ethanol companies are ready to innovate and take advantage of them, but he wonders if the value of the credit will be enough to get sustainable aviation fuel production off the ground because of the extra refinement needed.

The 45Z Clean Fuel Production Credit is one of the few tax policies House Republicans kept from the Biden-era Inflation Reduction Act. As written, the credit would extend to 2031. READ MORE; includes AUDIO

Excerpt from Associated Press: House Republicans narrowly advanced President Donald Trump’s big tax cuts package out of a key committee during a rare Sunday night vote, but just barely, as conservative holdouts are demanding quicker cuts to Medicaid and green energy programs before giving their full support.

Speaker Mike Johnson met with Republican lawmakers shortly before the meeting and acknowledged to reporters that there are still details to “iron out.” He said some changes were being made, but declined to provide details.

It’s all setting up a difficult week ahead for the GOP leadership racing toward a Memorial Day deadline, a week away, to pass the package from the House. The Budget Committee, which just days ago failed to advance the package when four conservative Republicans objected, was able to do so Sunday on a vote of 17-16, with the four hold-outs voting “present” to allow it to move ahead, as talks continue. READ MORE

Excerpt from Agri-Pulse: However, the 45Z credit for clean fuel producers would not only be preserved but also extended in the bill. Biofuel producers and farm groups have argued that the credit needed to be longer to give the market and industry more certainty. The bill also includes restrictions on where feedstocks can be sourced from and makes other adjustments to the credit as sought by biofuel groups. READ MORE

Excerpt from Clean Energy Business Network: The summary below covers the “One, Big, Beautiful, Bill Act,” which passed the House on May 22, 2025. In addition to the timeline adjustments below, this legislation implements stringent restrictions on “foreign entities of concern” that introduce extreme compliance risk and are administratively burdensome. The final House bill shifts these requirements up one year to 2026 from the Ways and Means version. This bill also reinstalls transferability for the duration of all tax credits while the Ways and Means bill eliminated this provision after 2027. Please note, this resource is educational only. Taxpayers may consider consulting a tax professional.

1 Manufacturers that have not surpassed 200,000 EVs sold, 30D tax credit phases out on Jan. 1, 2027. 2 For contracts signed before May 12, 2025 in which vehicles are placed in service by January 1, 2033, credit can be claimed. 3 Eliminates eligibility when homeowner rents or leases property to third party that is also eligible. 4 For homes that began construction before May 12, 2025, the 45L credit can be claimed for an additional year. READ MORE

Excerpt from Energy.AgWired.com: President Donald Trump’s “One Big, Beautiful Bill” passed in the U.S. House of Representatives Thursday morning on a vote of 215-214, with all Democrats and two Republicans voting against. The bill includes several provisions important to America’s ethanol producers and farmers.

“In addition to extending the 45Z clean fuel production credit by four years, the bill also reinstates crucial tax benefits that will stimulate research, experimentation, and innovation across the ethanol supply chain,” said Renewable Fuels Association President and CEO Geoff Cooper. “As the bill now moves to the Senate, we hope additional improvements can be made to ensure these tax policies truly drive demand growth for American-made renewable fuels.”

Sustainable Aviation Fuel (SAF) Coalition’s Executive Director, Alison Graab, says the bill extends the Clean Fuel Production Credit (45Z) through 2031. “This legislation provides the long-term certainty SAF producers need to scale operations, drive private sector investment, and benefits American farmers and rural economies. Sustainable aviation fuel is a vital solution for advancing U.S. energy dominance, driving rural economic growth, and establishing the United States as a global frontrunner in SAF production.”

American Farm Bureau Federation President Zippy Duvall says the bill “modernizes farm bill programs and extends and improves critical tax provisions that benefit America’s small farmers and ranchers. Updated reference prices will provide more certainty for farmers struggling through tough economic times. Making business tax deductions permanent and continuing current estate tax exemptions will ensure thousands of families will be able to pass their farms to the next generation.”

The bill includes an increase to the estate and gift tax exemption amounts to $15 million per individual and $30 million per couple, adjusted for inflation annually and makes this exemption permanent. Other provisions include a permanent increase to the Section 199A Small Business deduction from 20% to 23%, expanding the limitation on Section 179 from $1 million to $2.5 million, reinstating the 100% bonus depreciation for five years and extending the Federal Disaster Tax Relief Act of 2023. READ MORE