Farm and biofuel organizations welcomed the 2026 changes to the federal 45Z clean fuel production credit, saying they offer farmers and producers more certainty and a clearer route for agricultural feedstocks to count in emissions calculations. The rules were still proposed, not final, when the IRS issued Notice 2026-53 on September 8, 2026. That notice added 2026 emissions rates and transition guidance, but it did not establish that farmers have already seen higher income, investment or fuel prices.
What the 45Z clean fuel credit does
Section 45Z is a federal tax credit for eligible clean transportation fuel produced in the United States and sold in a qualified sale. It is claimed by eligible fuel producers, not automatically by farmers who grow or supply feedstocks. Farmers may affect a producer’s emissions calculation through feedstock characteristics and qualifying agricultural data or practices, but participation does not itself make a farmer the credit claimant.
The credit applies to eligible production after December 31, 2024, through December 31, 2029. Its amount depends on the fuel’s applicable emissions rate and other statutory and regulatory requirements. The statute sets an emissions baseline of 50 kg CO₂e per mmBTU. Producers must register with the IRS using Form 637 and claim the credit on Form 7218 filed with their income tax return. See the IRS Clean Fuel Production Credit page for program and filing information.
What changed in the proposed rules
The 2025 law amended Section 45Z, including extending the credit through 2029. In February 2026, the IRS proposed regulations addressing eligibility, emissions calculations, certification and registration. The changes described in the proposal included ending the separate, higher rate for sustainable aviation fuel (SAF), excluding indirect land-use-change emissions from the calculation, and limiting eligible feedstock sourcing to the United States, Canada and Mexico. The IRS announcement describes the February 2026 proposed regulations.
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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →These were proposed regulations, not final rules. Notice 2026-53, issued September 8, 2026, provided additional guidance while the proposed regulations remained under consideration. For fuel produced after December 31, 2025, the notice says emissions rates exclude indirect land-use-change emissions, eligible feedstocks must be produced or grown in the United States, Canada or Mexico, and negative emissions rates are generally barred, with an exception for manure-derived fuel. The IRS published the notice in Internal Revenue Bulletin 2026-41 and issued a readable announcement.
What the September 2026 IRS notice added
Emissions rates and transition rules
Notice 2026-53 supplies the emissions-rate table for 2026 and explains how to handle transition periods when an approved methodology has not yet incorporated statutory changes. It addresses used cooking oil and other feedstocks. Depending on the model used, a producer may need separate emissions results for fuel produced on either side of the December 31, 2025 boundary. The applicable production date, fuel category, feedstock and model version therefore matter to the calculation; the notice is not a single rate that applies to every fuel.
For the notice and its technical details, see the IRS Notice 2026-53 PDF. Producers should use the emissions table and methodology that apply to their production and retain the supporting records required for their claim.
Agricultural practices and documentation
Qualifying low-carbon agricultural practices consistent with USDA technical guidelines can be reflected in calculations through the 45Z-specific Feedstock Carbon Intensity Calculator and its model inputs, subject to the notice’s requirements and substantiation. For eligible fuel produced in 2025 and 2026, transition relief applies to certain pre-application nutrient-budget requirements. It does not remove the need to substantiate nutrient applications and other inputs or to keep records supporting the credit. A practice alone does not guarantee eligibility or a larger credit.
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Manure-derived fuel
For manure-derived fuel produced after 2025, emissions rates must be distinct by manure type. The 2026 table covers dairy and swine manure. The IRS said it anticipated adding poultry and beef manure later in 2026; that was a planned update as of the notice, not a statement that the additions were already available.
In some circumstances, a farm’s prior manure-management practices can affect the alternative-fate calculation, but the producer must substantiate those practices. The notice says the model does not provide a farm-specific alternative fate for manure from a new farm that began operating after September 8, 2026, pending further guidance. Because model availability can change, producers should check the current DOE model before relying on a particular manure pathway.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why farm and biofuel groups praised the updates
The reactions reflect industry perspectives on the value of greater certainty and recognition of farm data; they are not independent measurements of the rules’ economic results. In a February 5, 2026, reaction roundup, Successful Farming reported that American Carbon Alliance CEO Tom Buis called the proposal a step toward certainty for farmers, ethanol producers and rural communities. American Coalition for Ethanol CEO Brian Jennings welcomed more certainty but said producers still needed clarity on monetizing low-carbon feedstocks. He also described ACE’s participation in reviewing and beta-testing the USDA calculator. Continuum Ag CEO Mitchell Hora said, “We got a big win today,” while noting that farmers’ eventual role remained uncertain.
After the IRS notice, Growth Energy CEO Emily Skor said, “Farmers and biofuel producers asked and the Trump administration has delivered,” and called the guidance key to ensuring farmers reap benefits of the credit. That is Growth Energy’s position, stated in its September 8, 2026 response. The IRS announcement quoted its CEO, Frank J. Bisignano, saying the guidance would help farmers, ranchers and fuel producers access opportunities in the domestic biofuels market. Such statements express institutional views; the IRS and the cited stakeholder sources do not establish measured changes in farm income, investment, employment or fuel prices.
What farmers and producers should check
The credit is a producer tax benefit, while farmers’ potential contribution is generally through eligible feedstocks and substantiated data. Before a producer relies on a feedstock or practice in a claim, the relevant questions are:
- Production date: Does the fuel fall in 2025 or after December 31, 2025, when several amended sourcing and emissions rules apply?
- Fuel type: Is the fuel SAF or another eligible transportation fuel, and which rate and methodology apply?
- Feedstock origin: Was it produced or grown in the United States, Canada or Mexico where the post-2025 sourcing condition applies?
- Feedstock and model: Which annual emissions table and model version cover the fuel and feedstock?
- Farm practices and records: Do the practice, nutrient and other input records satisfy the applicable USDA and IRS requirements?
- Manure pathway: If the fuel is manure-derived, does the applicable table cover that manure type, and can the farm substantiate any prior management practice used in an alternative-fate calculation?
These are calculation and substantiation issues, not a promise that any particular farm qualifies or that the producer will receive a specific credit amount. The notice’s production endpoint is December 31, 2029; that date is not an annual filing deadline.
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