Biodiesel Tax Credit Extension Act of 2025

Bill Number

H.R. 3137

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-05-01: Referred to the House Committee on Ways and Means.

Last Updated

2025-06-04T13:37:31Z

AI-Generated Summary

Purpose

The Biodiesel Tax Credit Extension Act of 2025 aims to extend certain tax incentives for biodiesel, renewable diesel, and second-generation biofuels. These incentives encourage the production and use of cleaner fuel alternatives by providing financial credits to producers and users, helping to reduce reliance on traditional fossil fuels.

Key Provisions

• Extension of Biodiesel and Renewable Diesel Credit (Section 40A): Extends the tax credit for producing or using biodiesel and renewable diesel (fuels made from biomass like vegetable oils or animal fats) through December 31, 2026. Previously, it was set to expire at the end of 2024.
• Extension of Biodiesel Mixture Credit (Section 6426): Extends credits for mixing biodiesel with other fuels, applicable to both taxable uses (like in vehicles) and non-taxable uses (like farming equipment), through December 31, 2026.
• Extension of Alcohol Fuel Credit for Second-Generation Biofuels (Section 40): Extends credits for producing second-generation biofuels (advanced fuels from non-food sources like agricultural waste) through December 31, 2026, with production after that date eligible until January 1, 2027.
• Denial of Double Benefit Rules: Introduces provisions to prevent taxpayers from claiming these credits alongside the Clean Fuel Production Credit (under Section 45Z, a newer incentive for low-emission fuels). If the Section 45Z credit is claimed for a fuel, the amount under these older credits is reduced to zero.

Significant Changes to Existing Law

• Expiration Date Extensions: Shifts the end dates for biodiesel/renewable diesel credits and biodiesel mixture credits from December 31, 2024, to December 31, 2026. For second-generation biofuels, the alcohol fuel credit extension moves from January 1, 2025, to January 1, 2027.
• Anti-Double-Dipping Mechanism: Adds new subsections to Sections 40A, 6426, and 40 explicitly coordinating with Section 45Z to eliminate overlapping credits, ensuring taxpayers cannot claim benefits twice for the same fuel. This is a new coordination rule not present in prior law.
• Effective Dates: Changes apply to fuel sold or used after December 31, 2024, for biodiesel-related credits, and to production after that date for second-generation biofuels.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) will need to update forms and processes to administer the extended credits and enforce the double-benefit rules, potentially increasing administrative workload but supporting broader clean energy goals under federal environmental policies.
• On Citizens: Consumers and businesses using biodiesel mixtures may see continued cost savings on fuel taxes, making alternative fuels more affordable and promoting wider adoption. This could indirectly lower energy costs for transportation and agriculture.
• On International Relations: Minimal direct impact, though extending U.S. biofuel incentives may align with global efforts to reduce carbon emissions (e.g., under international climate agreements), potentially boosting U.S. exports of biofuel technology or feedstocks.
• Broader Effects: Encourages investment in domestic biofuel production, which could create jobs in rural areas and reduce greenhouse gas emissions from transportation, but may lead to short-term federal revenue loss from forgone taxes (estimated in billions over the extension period).

Main Stakeholders Affected

• Biodiesel and Biofuel Producers: Primary beneficiaries, including companies that manufacture biodiesel from sources like soybeans or waste oils, as extended credits reduce production costs and improve market competitiveness.
• Fuel Blenders and Users: Businesses mixing biodiesel into diesel fuel (e.g., trucking companies, farmers) and end-users claiming credits for non-taxable uses, who gain financial relief.
• Taxpayers and Renewable Energy Sector: Broader clean energy firms transitioning to advanced fuels under Section 45Z, now clearly separated from these credits to avoid conflicts.
• Government: U.S. Treasury and IRS, which manage tax expenditures; environmental agencies like the EPA may see indirect benefits through increased biofuel use.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Strengthens tax code consistency by preventing duplicate claims, reducing potential for disputes or audits over credit eligibility. No challenges to existing statutes, as it builds on the Internal Revenue Code without altering core tax principles.
• Constitutional Implications: None apparent; the bill involves standard congressional authority over taxation and spending under Article I, Section 8, and does not infringe on states' rights or individual liberties.
• Political Implications: Supports bipartisan interest in energy independence and climate action, as evidenced by cosponsors from both parties. It extends expiring provisions from prior laws (e.g., under the Inflation Reduction Act framework), potentially influencing future debates on renewable energy subsidies amid fiscal concerns over tax revenue.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Carey, Mike [R-OH-15]

Cosponsors (16)

Rep. Miller-Meeks, Mariannette [R-IA-1], Rep. Tenney, Claudia [R-NY-24], Rep. Johnson, Dusty [R-SD-At Large], Rep. Garbarino, Andrew R. [R-NY-2], Rep. LaHood, Darin [R-IL-16], Rep. Kelly, Mike [R-PA-16], Rep. Hinson, Ashley [R-IA-2], Rep. Golden, Jared F. [D-ME-2], Rep. Budzinski, Nikki [D-IL-13], Rep. Nunn, Zachary [R-IA-3], Rep. Carbajal, Salud O. [D-CA-24], Rep. Feenstra, Randy [R-IA-4], Rep. Bost, Mike [R-IL-12], Rep. Sorensen, Eric [D-IL-17], Rep. Costa, Jim [D-CA-21], Rep. Mann, Tracey [R-KS-1]

Recent Actions

• 2025-05-01: Referred to the House Committee on Ways and Means.
• 2025-05-01: Introduced in House
• 2025-05-01: Introduced in House

Bill Versions

• Biodiesel Tax Credit Extension Act of 2025 — issued 2025-05-01 — PDF (4 pages)