Biodiesel Tax Credit

Biodiesel Tax Credit

The Biodiesel Tax Credit is a federal tax incentive designed to encourage the production and use of biodiesel, a renewable fuel made from agricultural products or recycled fats. The credit allows producers and blenders of biodiesel to receive a dollar-for-dollar reduction on their federal income tax liability.

Specifically, eligible businesses can claim a credit of $1.00 per gallon of biodiesel produced or blended, which can significantly reduce the overall tax burden for those engaged in biodiesel production. This credit is aimed at promoting the use of cleaner-burning fuels, supporting energy independence, and enhancing economic development in rural areas.

For example, if a company produces 10,000 gallons of biodiesel in a tax year, it may claim a credit of $10,000 against its federal income tax liability.