H.R. 1 (the ‘One Big Beautiful Bill Act’) Signed Into Law: Key Fuels-Related Changes You Should Know
On July 4, 2025, President Trump signed into law H.R. 1, the “One Big Beautiful Bill Act”, which includes several important fuels-related tax updates. These changes impact dyed diesel refunds, sustainable aviation fuel (SAF) credits, and the Clean Fuel Production Credit (IRC § 45Z), which replaces the former Blender’s Tax Credit. Here's what you need to know to stay compliant and capture potential opportunities.
Dyed Diesel Refund – IRC § 6435
Provides a new refund of the $0.244/gallon Federal Excise Tax (FET) paid on clear diesel or kerosene that is subsequently dyed and removed at a terminal rack.
Sustainable Aviation Fuel (SAF) Credit – IRC § 6426(k)
Sunsets the FET credit for any sale or use of SAF after September 30, 2025.
Clean Fuel Production Credit – IRC § 45Z
Extends the income tax credit through December 31, 2029 (previously 2027).
Limits credit eligibility to fuel derived exclusively from feedstock produced or grown in the US, Mexico, or Canada for fuel produced after December 31, 2025.
Eliminates the special rate for SAF transportation fuel sold after December 31, 2025.
Authorizes the IRS/Treasury to clarify credit eligibility for related-party sales outside consolidated groups in future guidance.
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