26 U.S.C. § 40B

Current through P.L. 118-107 (published on www.congress.gov on 11/21/2024)

Section 40B - Sustainable aviation fuel credit

(a) In general

For purposes of section 38, the sustainable aviation fuel credit determined under this section for the taxable year is, with respect to any sale or use of a qualified mixture which occurs during such taxable year, an amount equal to the product of-

(1) the number of gallons of sustainable aviation fuel in such mixture, multiplied by

(2) the sum of-

(A) $1.25, plus

(B) the applicable supplementary amount with respect to such sustainable aviation fuel.

(b) Applicable supplementary amount

For purposes of this section, the term "applicable supplementary amount" means, with respect to any sustainable aviation fuel, an amount equal to $0.01 for each percentage point by which the lifecycle greenhouse gas emissions reduction percentage with respect to such fuel exceeds 50 percent. In no event shall the applicable supplementary amount determined under this subsection exceed $0.50.

(c) Qualified mixture

For purposes of this section, the term "qualified mixture" means a mixture of sustainable aviation fuel and kerosene if-

(1) such mixture is produced by the taxpayer in the United States,

(2) such mixture is used by the taxpayer (or sold by the taxpayer for use) in an aircraft,

(3) such sale or use is in the ordinary course of a trade or business of the taxpayer, and

(4) the transfer of such mixture to the fuel tank of such aircraft occurs in the United States.

(d) Sustainable aviation fuel

(1) In general

For purposes of this section, the term "sustainable aviation fuel" means liquid fuel, the portion of which is not kerosene, which-

(A) meets the requirements of-

(i) ASTM International Standard D7566, or

(ii) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1,

(B) is not derived from coprocessing an applicable material (or materials derived from an applicable material) with a feedstock which is not biomass,

(C) is not derived from palm fatty acid distillates or petroleum, and

(D) has been certified in accordance with subsection (e) as having a lifecycle greenhouse gas emissions reduction percentage of at least 50 percent.

(2) Definitions

In this subsection-

(A) Applicable material

The term "applicable material" means-

(i) monoglycerides, diglycerides, and triglycerides,

(ii) free fatty acids, and

(iii) fatty acid esters.

(B) Biomass

The term "biomass" has the same meaning given such term in section 45K(c)(3).

(e) Lifecycle greenhouse gas emissions reduction percentage

For purposes of this section, the term "lifecycle greenhouse gas emissions reduction percentage" means, with respect to any sustainable aviation fuel, the percentage reduction in lifecycle greenhouse gas emissions achieved by such fuel as compared with petroleum-based jet fuel, as defined in accordance with-

(1) the most recent Carbon Offsetting and Reduction Scheme for International Aviation which has been adopted by the International Civil Aviation Organization with the agreement of the United States, or

(2) any similar methodology which satisfies the criteria under section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in effect on the date of enactment of this section.

(f) Registration of sustainable aviation fuel producers

No credit shall be allowed under this section with respect to any sustainable aviation fuel unless the producer or importer of such fuel-

(1) is registered with the Secretary under section 4101, and

(2) provides-

(A) certification (in such form and manner as the Secretary shall prescribe) from an unrelated party demonstrating compliance with-

(i) any general requirements, supply chain traceability requirements, and information transmission requirements established under the Carbon Offsetting and Reduction Scheme for International Aviation described in paragraph (1) of subsection (e), or

(ii) in the case of any methodology established under paragraph (2) of such subsection, requirements similar to the requirements described in clause (i), and

(B) such other information with respect to such fuel as the Secretary may require for purposes of carrying out this section.

(g) Coordination with credit against excise tax

The amount of the credit determined under this section with respect to any sustainable aviation fuel shall, under rules prescribed by the Secretary, be properly reduced to take into account any benefit provided with respect to such sustainable aviation fuel solely by reason of the application of section 6426 or 6427(e).

(h) Termination

This section shall not apply to any sale or use after December 31, 2024.

26 U.S.C. § 40B

Added Pub. L. 117-169, title I, §13203(a), Aug. 16, 2022, 136 Stat. 1932.

EDITORIAL NOTES

REFERENCES IN TEXTThe date of enactment of this section, referred to in subsec. (e)(2), is the date of enactment of Pub. L. 117-169, which was approved Aug. 16, 2022.

STATUTORY NOTES AND RELATED SUBSIDIARIES

EFFECTIVE DATE Pub. L. 117-169, §13203(f), Aug. 16, 2022, 136 Stat. 1935, provided that: "The amendments made by this section [enacting this section and amending sections 38, 40A, 87, 4101, 6426, and 6427 of this title] shall apply to fuel sold or used after December 31, 2022."

Secretary: The term "Secretary" means the Secretary of the Treasury or his delegate.
taxable year: The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
taxpayer: The term "taxpayer" means any person subject to any internal revenue tax.
trade or business: The term "trade or business" includes the performance of the functions of a public office.