Details of Public Law 119-21, section 70521 , One Big Beautiful Bill Act

Clean fuel production credit (IRC section 45Z)

The provision extends the clean fuel production credit for transportation fuel sold until December 31, 2029. The provision prohibits eligibility for the credit for specified foreign entities for taxable years beginning after July 4, 2025, and prohibits eligibility for the credit for foreign-influenced entities for taxable years beginning after July 4, 2027. The provision limits the credit to transportation fuel derived from feedstock produced or grown in the United States, Mexico, or Canada and eliminates the special credit rate for sustainable aviation fuel for fuel produced after December 31, 2025. This provision modifies emission rates, including prohibiting negative emission rates except for the emissions rate applicable to transportation fuel derived from animal manure which can be less than zero, for emission rates published for transportation fuel produced after December 31, 2025. The provision prohibits the taxpayer from claiming a double credit for fuel that is produced from a fuel for which a clean fuel production credit is allowable.

Coordination of credits (IRC section 6426)

The provision disallows the sustainable aviation fuel excise tax credit for any gallon for which the clean fuel production credit is allowable. The provision provides that the sustainable aviation fuel credit would no longer apply to any sale or use for any period after September 30, 2025. This provision retroactively applies to fuel sold before July 4, 2025, but only to the extent that credits claimed have not been paid or allowed as of July 4, 2025.

Biodiesel and renewable diesel use as fuel (IRC section 40A and IRC section 6418)

The provision increases the amount of small agri-biodiesel producer credit and allows the credit in addition to any applicable clean fuel production credit. The provision (IRC section 6418) also allows the small agri-biodiesel producer credit to be transferred to an unrelated taxpayer. The provision extends the operation of the small agri-biodiesel producer credit until any sale or use after December 31, 2026, and applies to fuel sold or used after June 30, 2025.

California does not conform to these provisions. As a result, California does not conform to the changes made by this provision. Additionally, FTB does not administer excise taxes.