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How To Claim the Credit

To qualify for the credit, the clean fuel must be transportation fuel produced in the United States (including U.S. territories) by the taxpayer at a qualified facility after 2024, and sold by the taxpayer to an unrelated person for a use described in section 45Z(a)(4) during the tax year. The taxpayer must be registered as a producer of clean fuel under section 4101 at the time of production to claim the credit. For more information about section 45Z(f) registration requirements, see Notice 2024-49, available at IRS.gov/irb/2024-26_IRB#NOT-2024-49.

obÌåÓý a separate Form 7218 for each qualified facility for which you claim the section 45Z credit. Complete Part I to report facility information and the appropriate lines of Parts II and III, as needed, to calculate your clean fuel production credit for such facility.

Amount of Credit

The clean fuel production credit for any tax year is adjusted annually for inflation. The credit is calculated by multiplying the applicable amount by each gallon (or gallon equivalent) of fuel produced and sold by the emissions factor of the fuel.

The applicable amount ranges from $0.20 to $1.75 per gallon depending on whether the fuel is sustainable aviation fuel (SAF) or non-SAF, and if prevailing wage and apprenticeship (PWA) requirements are met.

Applicable Amount

The applicable amount is adjusted by multiplying the base amount by the inflation adjustment factor for the calendar year in which the sale of the transportation fuel occurs. When released, the inflation adjustment factor for 2025 will be available on IRS.gov. If this adjusted amount is not a multiple of 1 cent, the amount must be rounded to the nearest multiple of 1 cent.

Emissions Factor

The emissions factor is calculated by subtracting the emissions rate or provisional emissions rate (PER) value (in kilograms of CO₂e per mmBTU) of the fuel from 50 kilograms of CO₂e per mmBTU and dividing the result by 50 kilograms of CO₂e per mmBTU.

The Treasury Department and the IRS will annually publish a table that sets forth the emissions rate for similar types and categories of transportation fuels based on the amount of lifecycle greenhouse gas emissions as described in section 211(o)(1)(H) of the Clean Air Act (CAA) (42 U.S.C. 7545(o)(1)(H)), as in effect on August 16, 2022 (emissions rate table).

Prevailing Wage Requirements

To meet the prevailing wage requirements with respect to any qualified facility, a taxpayer must ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in:

For qualified facilities placed in service before 2025, the taxpayer is not subject to the prevailing wage requirements with respect to the construction of the facility but is subject to the prevailing wage requirements for the alteration or repair of the facility with respect to any tax year beginning after 2024, for which the section 45Z credit is allowed.

Apprenticeship Requirements

The apprenticeship requirements of IRA 2022 include three components: a labor hours requirement, a ratio requirement, and a participation requirement.

For further information on the PWA requirements, go to IRS.gov/credits-deductions/frequently-asked-questions-about-the-prevailing-wage-and-apprenticeship-under-the-inflation-reduction-act.

Definitions

Line 1

If applicable, enter your pre-filing registration number which you received from the IRS. See Pre-filing registration requirement for payments or transfers , earlier.

Line 2a

Enter a description of the qualified facility where the transportation fuel was produced.

Line 2b

If different from filer, enter owner's name and taxpayer identification number (TIN).

Lines 2c and 2d

Enter the address of the facility and the coordinates of the facility.

Line 3

Enter the date construction began. This information is needed to determine the credit amount based on PWA requirements.

Line 4

Enter the date the qualified facility was originally placed in service. This information is needed to determine the credit amount based on PWA requirements.

Line 5a

Enter the producer registration number issued by the IRS. See Notice 2024-49, section 4, available at IRS.gov/irb/2024-26_IRB#NOT-2024-49, for the procedures to register as a producer of clean fuel. Frequently asked questions about applying for registration are available at IRS.gov/newsroom/frequently-asked-questions-about-applying-for-registration-for-the-clean-fuel-production-credit-under-ss-45z.

If the registration number does not fit on this line or you have more than one registration number, please attach a document with this information to your Form 7218.

Line 5b

Enter the date of your registration letter providing approval for producers of transportation fuel with activity letter CN (non-SAF) or CA (SAF). No clean fuel production credit can be claimed for any transportation fuel unless the taxpayer is registered as a producer of clean fuel under section 4101 at the time of production. For example, if a taxpayer receives a letter of registration dated June 30, 2025, the taxpayer cannot claim the section 45Z credit for any transportation fuel produced and sold by the taxpayer before June 30, 2025, even if all other section 45Z requirements are met prior to that date. That taxpayer can only claim the section 45Z credit for transportation fuel produced and sold on or after June 30, 2025.

Line 6

Check the box if you are using a PER value to calculate the clean fuel production credit. A taxpayer may file a petition with the Secretary for determination of the emissions rate for any transportation fuel for which an emissions rate has not already been established. The Treasury Department and the IRS will provide guidance regarding the emissions rate table and PER petition procedures at a later time.

Line 7

Check ¡°Yes¡± if you satisfy the section 45Z(f)(6) and section 45Z(f)(7) PWA requirements. See Prevailing Wage Requirements and Apprenticeship Requirements , earlier.

Line 2

Enter the total clean fuel production credit amount from your distributive share reported on:

Partnerships and S corporations must enter the passed-through credits on line 2. Also, estates and trusts that can allocate the source credit to beneficiaries, and cooperatives that can allocate the credit to patrons, must enter the passed-through credits on line 2. obÌåÓýrs figuring credits on earlier lines of Form 7218 must enter the passed-through credits on line 2.

If you are not a filer described above, and your only clean fuel production credit is a credit(s) passed through to you, you can report the credit(s) directly on Form 3800, Part III, line 1q.

Line 3

Line 4

Column (a)

Enter the type of fuel and if it is non-SAF or SAF. For more information on types of fuel that may qualify as transportation fuel, see section 3 of Notice 2024-49, available at IRS.gov/irb/2024-26_IRB#NOT-2024-49.

Column (b)

Enter the type of feedstock used to produce the fuel. See Appendix A of Notice 2024-49 for a list of feedstocks and feedstock types associated with the varieties of fuel that may qualify as transportation fuel.

Column (c)

Enter the four-digit calendar year when the fuel was sold.

Column (d)

Enter the emissions rate or PER value (in kilograms of CO₂e per mmBTU) of the fuel. See Emissions Factor , earlier.

Column (e)

Subtract the emissions rate or PER value (in kilograms of CO₂e per mmBTU) from 50 kilograms of CO₂e. Divide the result by 50 kilograms of CO₂e, and enter in column (e).

Column (f)

Enter the number of gallons or gallon equivalents of fuel sold in the calendar year.

Column (g)

Enter the inflation-adjusted applicable amount for the fuel sold. See Applicable Amount , earlier, to determine which amount to use.

Column (h)

For all lines with entries, multiply column (e) x column (f) x column (g) and enter the product in the corresponding line of column (h). On line 25, add all the column (h) amounts, and enter on Part II, line 1.