CROP Act

Bill Number

S. 3297

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-12-02: Read twice and referred to the Committee on Finance.

Last Updated

2025-12-19T20:15:38Z

AI-Generated Summary

Purpose

The legislation, titled the "Consumer Relief and Opportunities for Producers Act" (or "CROP Act"), aims to temporarily extend a tax credit for biodiesel fuels. This provides financial incentives for producing and using biodiesel (a renewable fuel made from sources like vegetable oils or animal fats) while preventing overlap with other similar tax benefits. The goal is to support biodiesel producers and offer potential cost relief to fuel consumers during a short-term period.

Key Provisions

• Extension of Biodiesel Fuels Credit: Amends Section 40A(g) of the Internal Revenue Code of 1986 to extend the availability of the biodiesel fuels credit from its previous expiration date of December 31, 2024, to May 31, 2026.
• No Double Benefit Rule: Adds a new subsection (g) to Section 40A, which prohibits claiming the biodiesel credit for any fuel that also qualifies for the clean fuel production credit under Section 45Z (a broader incentive for low-emission fuels). This ensures taxpayers do not receive multiple credits for the same fuel.
• Conforming Changes: Updates related sections of the tax code:
• Section 6426(c)(6), which deals with credits for alcohol and biodiesel mixtures sold to consumers.
• Section 6427(e)(6)(B), which covers payments or refunds for biodiesel used in certain vehicles.

These changes align the expiration dates with the new May 31, 2026, deadline.

• Effective Date: The changes apply to biodiesel fuel used or sold after November 30, 2025, allowing a brief gap before reinstatement.

Significant Changes to Existing Law

• Expiration Extension: The original law set the biodiesel credit to end on December 31, 2024. This bill pushes it forward by about 17 months, providing a temporary revival without making it permanent.
• Anti-Overlap Provision: Introduces a new restriction to avoid "double-dipping" on tax credits, redesignating the old subsection (g) as (h) and inserting the no-double-benefit rule. This coordinates the biodiesel credit with the newer clean fuel production credit (Section 45Z), which became available starting in 2025.
• No other major overhauls; the bill focuses narrowly on timing and compatibility rather than altering credit amounts or eligibility criteria.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) will need to administer the extended credit, process additional claims, and enforce the no-double-benefit rule, potentially increasing short-term workload and revenue forgone (estimated tax expenditures).
• On Citizens: Fuel consumers, especially those using biodiesel blends in vehicles or heating, may see modest price reductions if producers pass on the tax savings. It supports rural economies tied to agriculture-based biodiesel production.
• On International Relations: Minimal direct impact, though it indirectly bolsters U.S. renewable energy efforts, which could align with global climate goals without affecting trade or foreign policy.
• Overall, the temporary nature limits long-term effects, but it could stabilize the biodiesel market during a transition period for cleaner fuels.

Main Stakeholders Affected

• Biodiesel Producers and Suppliers: Primary beneficiaries, as the reinstated credit reduces production costs and encourages output during the extension period.
• Fuel Consumers and Retailers: Indirectly helped through potential lower prices for biodiesel-mixed fuels, particularly in transportation and agriculture sectors.
• Taxpayers and the IRS: Taxpayers claiming credits must navigate the new rules to avoid penalties; the IRS handles compliance and revenue adjustments.
• Renewable Energy Sector: Complements broader clean energy incentives, affecting companies transitioning between biodiesel and advanced low-carbon fuels.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens tax code consistency by preventing duplicate credits, reducing litigation risks over improper claims. As a revenue measure, it fits within Congress's taxing power under the U.S. Constitution (Article I, Section 8) and requires no new appropriations.
• Constitutional: No apparent challenges; it is a straightforward amendment to existing tax law without infringing on states' rights or individual liberties.
• Political: The bill's short-term extension reflects bipartisan interest in energy independence and rural support (introduced by Sen. Blackburn, R-TN), but its temporary scope may signal ongoing debates over permanent renewable tax incentives amid shifting energy policies. It avoids broader fiscal impacts by limiting duration, potentially easing passage in a divided Congress.

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

Sponsor

Sen. Blackburn, Marsha [R-TN]

Cosponsors (1)

Sen. Tillis, Thomas [R-NC]

Recent Actions

• 2025-12-02: Read twice and referred to the Committee on Finance.
• 2025-12-02: Introduced in Senate

Bill Versions

• Consumer Relief and Opportunities for Producers Act — issued 2025-12-02 — PDF (2 pages)