To amend the Internal Revenue Code of 1986 to repeal the clean fuel production credit.

Bill Number

H.R. 549

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-16: Referred to the House Committee on Ways and Means.

Last Updated

2025-04-07T10:40:48Z

AI-Generated Summary

Purpose

The legislation, H.R. 549, aims to eliminate a specific tax incentive designed to encourage the production of clean fuels by repealing the associated credit in the U.S. tax code. This would remove financial support for producing fuels with low greenhouse gas emissions, such as certain biofuels or synthetic fuels.

Key Provisions

• Repeal of Section 45Z: The bill amends the Internal Revenue Code of 1986 (the main U.S. tax law) by completely removing Section 45Z, which provides a tax credit for producing clean fuels. It also deletes the reference to this section from the code's table of contents.
• Effective Date: The repeal takes effect for tax years starting after December 31, 2024, meaning the credit would no longer be available for production in 2025 and beyond.

Significant Changes to Existing Law

• This bill directly overturns a provision from the Inflation Reduction Act of 2022, which introduced the clean fuel production credit (Section 45Z) to promote sustainable fuel alternatives to traditional fossil fuels.
• Prior to repeal, eligible producers could claim a credit of up to $1 per gallon for clean transportation fuels based on their emissions reduction compared to petroleum-based fuels. Removing this ends the credit's availability, shifting away from tax-based incentives for low-emission fuel production.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) would simplify tax administration by no longer processing claims for this credit, potentially reducing paperwork and audits related to fuel production verification.
• On Citizens and Businesses: Producers of clean fuels (e.g., biodiesel or renewable natural gas makers) would lose a key financial incentive, possibly increasing costs and slowing adoption of greener fuels. General taxpayers might see indirect effects through changes in energy markets or federal revenue (the credit's repeal could increase government tax collections by eliminating the subsidy).
• On International Relations: Minimal direct impact, though it could signal a U.S. policy shift away from global clean energy goals, potentially affecting trade in sustainable fuels or diplomatic efforts on climate change.

Main Stakeholders Affected

• Clean Fuel Producers: Companies and facilities producing low-emission fuels would face higher operational costs without the tax credit, potentially leading to reduced investment or job losses in the sector.
• Energy Industry: Broader fossil fuel producers might benefit from less competition, while renewable energy advocates and environmental groups could oppose the repeal as a setback for sustainability.
• Taxpayers and Consumers: Individuals and businesses in transportation (e.g., airlines, trucking) relying on clean fuels might see higher prices; overall, it affects the push toward eco-friendly energy transitions.
• Federal Government: Congress and the Treasury Department, as the repeal alters tax policy and revenue streams.

Notable Legal, Constitutional, or Political Implications

• Legal: The change is straightforward and within Congress's authority to amend tax laws under Article I of the U.S. Constitution, which grants power to levy taxes. No major constitutional challenges are anticipated, but it could lead to litigation from affected industries claiming unfair retroactive impacts (though the effective date provides notice).
• Political: This repeal reflects debates over federal spending on green initiatives versus fiscal conservatism; it may intensify partisan divides on climate policy, especially as it targets a recent Democratic-led law. Environmentally, it could undermine U.S. commitments under international agreements like the Paris Accord by reducing incentives for emissions reductions in the fuel sector.

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

Sponsor

Rep. Van Duyne, Beth [R-TX-24]

Recent Actions

• 2025-01-16: Referred to the House Committee on Ways and Means.
• 2025-01-16: Introduced in House
• 2025-01-16: Introduced in House

Bill Versions

• To amend the Internal Revenue Code of 1986 to repeal the clean fuel production credit. — issued 2025-01-16 — PDF (2 pages)