Alternative Fuel Mixture Excise Tax Credit
NOTE: This incentive originally expired on December 31, 2016, but was retroactively extended through December 31, 2017, by House Resolution 1892, 2018.
An alternative fuel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive on the sale or use of the alternative fuel blend (mixture) for use as a fuel in the blender's trade or business. The credit is in the amount of $0.50 per gallon of alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene. Qualified alternative fuels are: compressed natural gas (based on 121 cubic feet), liquefied natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. The incentive must first be taken as a credit against the blender's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS. The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.
Under current law, this tax credit is applicable to fuel sold or used through December 31, 2017. The U.S. Department of the Treasury (Treasury) will issue guidance for how to submit claims by March 11, 2018. Claims may be submitted for a 180-day period beginning no later than 30 days after Treasury issues guidance, and claims will be paid no later than 60 days after receipt. (Reference House Resolution 1892, 2018, Public Law 114-113, and 26 U.S. Code 6426)
Point of Contact
Excise Tax Branch
U.S. Internal Revenue Service Office of Chief Counsel
Phone: (202) 317-6855