The National Association of State Departments of Agriculture (NASDA) appreciates the opportunity to provide comments on the Internal Revenue Service (IRS) and Department of the Treasury’s (Treasury) proposed guidance for the 45Z Clean Fuel Production Credit.
NASDA represents the commissioners, secretaries, and directors of the state departments of agriculture in all fifty states and four U.S. territories. State departments of agriculture are responsible for a wide range of programs, including conservation, environmental protection, food safety, plant and animal disease prevention, and fostering the economic vitality of our rural communities.
Importance of 45Z Clean Fuel Production Tax Credit
NASDA supports efforts to increase production and consumption of biofuels in the U.S. and recognizes that the 45Z Clean Fuel Production Tax Credit (45Z) signals meaningful certainty for biofuel producers, which will in turn drive greater demand and market opportunities for farmers and ranchers across the country. NASDA supports opportunities for producers of all types of feedstocks to benefit from these downstream incentives, including crop-derived feedstocks using corn, soybeans, grain sorghum, canola, and more, as well as other key pathways such as biogas derived from animal manure. Whether these feedstocks are used to produce sustainable aviation fuel (SAF) or non-SAF transportation fuels, 45Z has the potential to deliver a significant impact to rural economies.
As a nonpartisan organization, NASDA commends the durability of 45Z, which was established by the Inflation Reduction Act of 2022 and built on by the One Big Beautiful Bill Act (OBBBA) of 2025. NASDA also commends the IRS and Treasury for taking this critical step to propose this guidance and clarify numerous positive elements of the credit.
Key Proposed Updates
NASDA supports provisions in this proposed guidance to prioritize feedstocks sourced from North America. At our 2025 Winter Policy Conference, NASDA members unanimously adopted policy supporting “federal biofuel tax policy that gives preference to the usage of domestic
feedstocks for U.S. biofuel production and establishes appropriate testing, verification and recordkeeping requirements for imported used cooking oil (UCO) feedstocks.”1 This is imperative to ensuring the benefits of this credit for clean fuel producers are passed along to domestic feedstock producers. As IRS and Treasury finalize this guidance, NASDA urges all parties to continue to provide greater certainty for U.S. feedstock producers.
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