The Treasury Department and Internal Revenue Service have issued guidance regarding the sustainable aviation fuel (SAF) blender’s tax credit, which was established under the Inflation Reduction Act of 2022.
Notice 2023-06 explains the requirements for the fuel to be eligible for the blender's credit of $1.25 for each gallon of SAF in a qualified mix. To qualify for the credit, the SAF must have a minimum reduction of 50 percent in lifecycle greenhouse gas emissions. Additionally, for each percent of reduction that passes 50 percent, there will be a supplemental credit of one cent. It will apply to a qualified fuel mixture containing SAF for certain sales or uses in calendar years 2023 and 2024.
The document describes the various methods by which a claimant may claim the credit, either through the excise tax system, or a general business credit that is nonrefundable and must be included in income. It also outlines which parties must be registered for the different activities in the process.
The notice also requests public comments on various aspects of the statute by February 17. These comments will help the agencies in developing additional guidance.