Farmers, Get Ready: 45Z Tax Credit Changes Are a Game Changer!

Listen up, farmers! The One Big Beautiful Bill Act (OBBBA) has just dropped, and it’s a game changer for the agricultural sector. The 45Z tax credit, which was created under the Inflation Reduction Act of 2022, has been extended through 2029. This means biofuel producers have an additional two years of investment certainty, and that’s great news for you!

The 45Z tax credit, also known as the Clean Fuel Production Credit, consolidates tax credits for individual biofuels like biodiesel and sustainable aviation fuel. The OBBBA has made some key changes that will benefit U.S. growers. For one, anything used as a feedstock for 45Z fuels receiving the credit has to be made from feedstocks produced in the U.S., Mexico, or Canada. This means that foreign-owned or foreign-controlled companies are out of the picture, adding to American biofuels capacity. The OBBBA also takes out indirect land use changes through the emissions scoring that is used to determine what fuels qualify for what level of 45Z tax credit.

The goal is to increase biofuel capacity in the U.S. but also generate more demand for American agricultural products. Manure digesters from livestock can all be used as feedstocks, and so, especially when we're seeing years like this with record bumper crop years, the hope is that we determine more demand for American products to hopefully support these large crops that we continue to see.

So, what does this mean for you? It means increased demand for your products, more stable prices, and stronger market opportunities. The USDA projects that 35% of U.S. corn production will be used for ethanol in 2025, and more than 50% of domestically produced soybean oil is expected to go into biofuels, including biodiesel and renewable diesel. This is a no-brainer! You need to be part of this growth story.

But remember, with great opportunity comes great responsibility. You need to adopt sustainable farming practices to lower your carbon intensity (CI) scores. The OBBBA requires the GREET model to be adjusted to exclude emissions from indirect land use change (ILUC), which means you can lower your CI scores by using no-till, cover cropping, or high-efficiency fertilizers. This can make your feedstocks more eligible for the 45Z tax credit, thereby increasing their market value.

So, farmers, get ready! The 45Z tax credit changes are a game changer, and you need to be part of this growth story. Don’t miss out on this opportunity to boost your income and support the growth of the biofuel industry. This is a win-win situation, and you need to be part of it!