US Treasury, IRS issue guidance on new SAF credit

In Washington D.C., the Treasury Department and Internal Revenue Service issued a notice regarding the Sustainable Aviation Fuel (SAF) credit. The agencies noted that this is a new credit created by the Inflation Reduction Act of 2022 and applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024. Notice 2023-06PDF explains the requirements for the fuel to be eligible for the SAF credit, the various methods in which a claimant may claim the credit, and which parties must be registered for the different activities in the process. The notice also asks for public comments on various aspects of the statute, which will help Treasury and IRS in developing additional guidance. The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50%.

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