26 U.S.C. § 6426 — Credit for alcohol fuel, biodiesel, and alternative fuel mixtures
submitted 22 years ago by Pub. L. 108-357 to r/title-26-INTERNAL-REVENUE-CODE · 1,846 words · no verdicts yet
This section provides excise-tax credits for alcohol, biodiesel, alternative fuels, mixtures, and sustainable aviation fuel. It sets rates, definitions, certifications, exclusions, geographic limits, and termination dates.
(a) Credits allowed. A credit against section 4081 tax equals the credits in subsections (b), (c), (e), and (k). A credit against section 4041 tax equals the credit in subsection (d). A credit under (d) or (e) is allowed only to a taxpayer* registered under section 4101.
(b) Alcohol-fuel-mixture credit. (1) The credit is the applicable amount times the gallons of alcohol used to make an alcohol-fuel mixture for the taxpayer’s business. (2) The applicable amount is 51 cents for calendar years beginning before 2009 and 45 cents for years beginning after 2008. It is 60 cents if no alcohol is ethanol. For a year after 2008, if the Secretary* makes the section 40(h)(3)(B) determination for every preceding year after 2007, use 51 cents instead of 45 cents. (3) An alcohol-fuel mixture is alcohol mixed with taxable fuel and sold for fuel use or used as fuel by its producer. A refinery mixture containing ethyl tertiary butyl ether or other alcohol-made ethers is treated as sold, only then, when removed from the refinery to another person for fuel use. (4) Alcohol includes methanol and ethanol, but not petroleum-, natural-gas-, or coal-derived alcohol, or alcohol under 190 proof without regard to denaturants; it also includes the alcohol-gallon equivalent of certain ethers. “Taxable fuel” has the section 4083(a)(1) meaning. (5) Alcohol volume includes approved denaturants, including gasoline, up to 2 percent of total alcohol-and-denaturant volume. (6) This subsection ended for sales, uses, or removals after December 31, 2011.
(c) Biodiesel-mixture credit. (1) The credit is $1 times the gallons of biodiesel used to make a biodiesel mixture for the taxpayer’s business. (2) The applicable amount is $1. (3) A biodiesel mixture is biodiesel and diesel fuel, determined without regard to kerosene, sold for fuel use or used as fuel by its producer. (4) The taxpayer must obtain the Secretary-required certification from the biodiesel producer identifying the product and biodiesel and agri-biodiesel percentages. (5) A term also used in section 40A has that section’s meaning. (6) This subsection ended for sales, uses, or removals after December 31, 2024.
(d) Alternative-fuel credit. (1) The credit is 50 cents times gallons of alternative fuel, or gasoline-gallon equivalents of nonliquid alternative fuel, sold for use in a motor vehicle, motorboat, or aviation, or so used by the taxpayer. (2) Alternative fuel means liquefied petroleum gas; P Series Fuels as defined by the Secretary of Energy under 42 U.S.C. § 13211(2); compressed or liquefied natural gas; qualifying coal-derived Fischer-Tropsch liquid fuel; compressed or liquefied biomass gas; and biomass-derived liquid fuel. It excludes ethanol, methanol, biodiesel, and fuel from paper or pulp production, including lignin, wood residues, and spent pulping liquors. (3) A gasoline-gallon equivalent of nonliquid fuel is the amount with 124,800 Btu higher-heating-value content. (4) A fuel meets the carbon-capture requirement if certified under the Secretary’s procedures as derived from coal at a gasification facility that separates and sequesters at least the applicable share of total carbon-dioxide emissions: 50 percent for fuel produced after September 30 and on or before December 30, 2009, and 75 percent for fuel produced after December 30, 2009. (5) This subsection ended for sales or uses after December 31, 2024.
(e) Alternative-fuel-mixture credit. (1) The credit is 50 cents times gallons of alternative fuel used to make an alternative-fuel mixture for the taxpayer’s business. (2) The mixture is alternative fuel, other than fuel listed in subsection (d)(2)(A), (C), or (E), mixed with taxable fuel defined by section 4083(a)(1)(A), (B), or (C), and sold for fuel use or used as fuel by its producer. (3) This subsection ended for sales or uses after December 31, 2024.
(f) Mixture not used as fuel. (1) If a credit was determined for alcohol or biodiesel in a mixture and someone separates it or uses the mixture for a nonfuel purpose without separating it, that person owes a tax equal to the applicable amount times the gallons of alcohol or biodiesel. (2) Applicable laws and penalties apply as if section 4081 imposed that tax. (g) Rules similar to section 40(c) apply to coordinate with excise-tax exemptions. (h) No credit under (d) or (e) applies to fuel eligible for a credit under (b), (c), section 40, 40A, or 40B. (i) No credit applies to alcohol, biodiesel, or alternative fuel produced outside the United States for use outside the United States; “United States” includes its possessions. (j) For credit calculations, liquefied petroleum gas uses the energy equivalent of gasoline defined in section 4041(a)(2)(C), and liquefied natural gas uses the energy equivalent of diesel defined in section 4041(a)(2)(D). (k) Sustainable aviation fuel. (1) For a qualified mixture, the taxable-year credit is gallons of sustainable aviation fuel times $1.25 plus the applicable supplementary amount. (2) Terms also used in section 40B have section 40B meanings. (3) Section 40B(f)-like registration rules apply. (4) This subsection does not apply to a gallon for which section 45Z credit is allowable, determined without section 45Z(a)(1)(A). (5) This subsection ended for sales or uses after September 30, 2025.
There shall be allowed as a credit—
against the tax imposed by section 4081 an amount equal to the sum of the credits described in subsections (b), (c), (e), and (k), and
against the tax imposed by section 4041 an amount equal to the sum of the credits described in subsection (d).
No credit shall be allowed in the case of the credits described in subsections (d) and (e) unless the taxpayer* is registered under section 4101.
For purposes of this section, the alcohol fuel mixture credit is the product of the applicable amount and the number of gallons of alcohol used by the taxpayer in producing any alcohol fuel mixture for sale or use in a trade or business* of the taxpayer.
For purposes of this subsection—
Except as provided in subparagraphs (B) and (C), the applicable amount is—
in the case of calendar years beginning before 2009, 51 cents, and
in the case of calendar years beginning after 2008, 45 cents.
In the case of an alcohol fuel mixture in which none of the alcohol consists of ethanol, the applicable amount is 60 cents.
In the case of any calendar year beginning after 2008, if the Secretary* makes a determination described in section 40(h)(3)(B) with respect to all preceding calendar years beginning after 2007, subparagraph (A)(ii) shall be applied by substituting “51 cents” for “45 cents”.
For purposes of this subsection, the term “alcohol fuel mixture” means a mixture of alcohol and a taxable fuel which—
is sold by the taxpayer producing such mixture to any person for use as a fuel, or
is used as a fuel by the taxpayer producing such mixture.
For purposes of subparagraph (A), a mixture produced by any person at a refinery prior to a taxable event which includes ethyl tertiary butyl ether or other ethers produced from alcohol shall be treated as sold at the time of its removal from the refinery (and only at such time) to another person for use as a fuel.
For purposes of this subsection—
The term “alcohol” includes methanol and ethanol but does not include—
alcohol produced from petroleum, natural gas, or coal (including peat), or
alcohol with a proof of less than 190 (determined without regard to any added denaturants).
Such term also includes an alcohol gallon equivalent of ethyl tertiary butyl ether or other ethers produced from such alcohol.
For purposes of determining under subsection (a) the number of gallons of alcohol with respect to which a credit is allowable under subsection (a), the volume of alcohol shall include the volume of any denaturant (including gasoline) which is added under any formulas approved by the Secretary to the extent that such denaturants do not exceed 2 percent of the volume of such alcohol (including denaturants).
This subsection shall not apply to any sale, use, or removal for any period after December 31, 2011.
For purposes of this section, the biodiesel mixture credit is the product of the applicable amount and the number of gallons of biodiesel used by the taxpayer in producing any biodiesel mixture for sale or use in a trade or business of the taxpayer.
For purposes of this subsection, the applicable amount is $1.00.
For purposes of this section, the term “biodiesel mixture” means a mixture of biodiesel and diesel fuel (as defined in section 4083(a)(3)), determined without regard to any use of kerosene, which—
is sold by the taxpayer producing such mixture to any person for use as a fuel, or
is used as a fuel by the taxpayer producing such mixture.
No credit shall be allowed under this subsection unless the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer of the biodiesel which identifies the product produced and the percentage of biodiesel and agri-biodiesel in the product.
Any term used in this subsection which is also used in section 40A shall have the meaning given such term by section 40A.
This subsection shall not apply to any sale, use, or removal for any period after December 31, 2024.
For purposes of this section, the alternative fuel credit is the product of 50 cents and the number of gallons of an alternative fuel or gasoline gallon equivalents of a nonliquid alternative fuel sold by the taxpayer for use as a fuel in a motor vehicle or motorboat, sold by the taxpayer for use as a fuel in aviation, or so used by the taxpayer.
For purposes of this section, the term “alternative fuel” means—
liquefied petroleum gas,
P Series Fuels (as defined by the Secretary of Energy under section 13211(2) of title 42, United States Code),
compressed or liquefied natural gas,
any liquid fuel which meets the requirements of paragraph (4) and which is derived from coal (including peat) through the Fischer-Tropsch process,
compressed or liquefied gas derived from biomass (as defined in section 45K(c)(3)), and
liquid fuel derived from biomass (as defined in section 45K(c)(3)).
Such term does not include ethanol, methanol, biodiesel, or any fuel (including lignin, wood residues, or spent pulping liquors) derived from the production of paper or pulp.
For purposes of this subsection, the term “gasoline gallon equivalent” means, with respect to any nonliquid alternative fuel, the amount of such fuel having a Btu content of 124,800 (higher heating value).
The requirements of this paragraph are met if the fuel is certified, under such procedures as required by the Secretary, as having been derived from coal produced at a gasification facility which separates and sequesters not less than the applicable percentage of such facility’s total carbon dioxide emissions.
For purposes of subparagraph (A), the applicable percentage is—
50 percent in the case of fuel produced after September 30, 2009, and on or before December 30, 2009, and
75 percent in the case of fuel produced after December 30, 2009.
This subsection shall not apply to any sale or use for any period after December 31, 2024.
For purposes of this section, the alternative fuel mixture credit is the product of 50 cents and the number of gallons of alternative fuel used by the taxpayer in producing any alternative fuel mixture for sale or use in a trade or business of the taxpayer.
For purposes of this section, the term “alternative fuel mixture” means a mixture of alternative fuel (other than a fuel described in subparagraph (A), (C), or (E) of subsection (d)(2)) and taxable fuel (as defined in subparagraph (A), (B), or (C) of section 4083(a)(1)) which—
is sold by the taxpayer producing such mixture to any person for use as fuel, or
is used as a fuel by the taxpayer producing such mixture.
This subsection shall not apply to any sale or use for any period after December 31, 2024.
If—
any credit was determined under this section with respect to alcohol or biodiesel used in the production of any alcohol fuel mixture or biodiesel mixture, respectively, and
any person—
separates the alcohol or biodiesel from the mixture, or
without separation, uses the mixture other than as a fuel,
then there is hereby imposed on such person a tax equal to the product of the applicable amount and the number of gallons of such alcohol or biodiesel.
All provisions of law, including penalties, shall, insofar as applicable and not inconsistent with this section, apply in respect of any tax imposed under paragraph (1) as if such tax were imposed by section 4081 and not by this section.
Rules similar to the rules under section 40(c) shall apply for purposes of this section.
No credit shall be determined under subsection (d) or (e) with respect to any fuel with respect to which credit may be determined under subsection (b) or (c) or under section 40, 40A, or 40B.
No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States.
No credit shall be determined under this section with respect to any biodiesel or alternative fuel which is produced outside the United States for use as a fuel outside the United States.
For purposes of this subsection, the term “United States” includes any possession of the United States.
For purposes of determining any credit under this section, any reference to the number of gallons of an alternative fuel or the gasoline gallon equivalent of such a fuel shall be treated as a reference to—
in the case of liquefied petroleum gas, the energy equivalent of a gallon of gasoline, as defined in section 4041(a)(2)(C), and
in the case of liquefied natural gas, the energy equivalent of a gallon of diesel, as defined in section 4041(a)(2)(D).
For purposes of this section, the sustainable aviation fuel credit for the taxable year* is, with respect to any sale or use of a qualified mixture, an amount equal to the product of—
the number of gallons of sustainable aviation fuel in such mixture, multiplied by
the sum of—
$1.25, plus
the applicable supplementary amount with respect to such sustainable aviation fuel.
Any term used in this subsection which is also used in section 40B shall have the meaning given such term by section 40B.
For purposes of this subsection, rules similar to the rules of section 40B(f) shall apply.
With respect to any gallon of sustainable aviation fuel in a qualified mixture, this subsection shall not apply to any such gallon for which a credit under section 45Z is allowable (as determined without regard to subsection (a)(1)(A) of such section).
This subsection shall not apply to any sale or use for any period after September 30, 2025.
Source credit: (Added Pub. L. 108–357, title III, § 301(a), Oct. 22, 2004, 118 Stat. 1459; amended Pub. L. 109–58, title XIII, § 1344(a), Aug. 8, 2005, 119 Stat. 1052; Pub. L. 109–59, title XI, §§ 11113(b)(1)–(3)(A), 11151(e)(2), Aug. 10, 2005, 119 Stat. 1947, 1948, 1969; Pub. L. 110–172, § 5(a)(2), (3), Dec. 29, 2007, 121 Stat. 2479; Pub. L. 110–234, title XV, §§ 15331(b), 15332(b), May 22, 2008, 122 Stat. 1516; Pub. L. 110–246, § 4(a), title XV, §§ 15331(b), 15332(b), June 18, 2008, 122 Stat. 1664, 2278; Pub. L. 110–343, div. B, title II, §§ 202(a), (b)(2), 203(c)(1), 204(a)(1), (2), (b), (c), Oct. 3, 2008, 122 Stat. 3832, 3834; Pub. L. 111–312, title VII, §§ 701(b)(1), 704(a), (b), 708(b)(1), Dec. 17, 2010, 124 Stat. 3310–3312; Pub. L. 112–240, title IV, §§ 405(b)(1), 412(a), Jan. 2, 2013, 126 Stat. 2340, 2343; Pub. L. 113–295, div. A, title I, § 160(a)(1), (b)(1), (c)(1), Dec. 19, 2014, 128 Stat. 4022; Pub. L. 114–113, div. Q, title I, §§ 185(b)(1), 192(a)(1), title III, § 342(a), Dec. 18, 2015, 129 Stat. 3073, 3075, 3114; Pub. L. 115–123, div. D, title I, §§ 40407(b)(1), 40415(a)(1), Feb. 9, 2018, 132 Stat. 149, 152; Pub. L. 115–141, div. U, title IV, § 401(a)(294), Mar. 23, 2018, 132 Stat. 1198; Pub. L. 116–94, div. Q, title I, §§ 121(b)(1)(A), 133(a)(1), (b)(1), Dec. 20, 2019, 133 Stat. 3230, 3233; Pub. L. 116–260, div. EE, title I, § 147(a), Dec. 27, 2020, 134 Stat. 3055; Pub. L. 117–169, title I, §§ 13201(b)(1), (c), (d), 13203(d)(1), (2)(A), 13204(d)(1), (2), Aug. 16, 2022, 136 Stat. 1931, 1932, 1934, 1935, 1941; Pub. L. 119–21, title VII, § 70521(g)(1)(A), (h), July 4, 2025, 139 Stat. 277, 278.)
- 2004Enacted · Pub. L. 108-357 · 118 Stat. 1459
- 2005Amended · Pub. L. 109-58 · 119 Stat. 1052
- 2005Amended · Pub. L. 109-59 · 119 Stat. 1947, 1948, 1969
- 2007Amended · Pub. L. 110-172 · 121 Stat. 2479
- 2008Amended · Pub. L. 110-234 · 122 Stat. 1516
- 2008Amended · Pub. L. 110-246 · 122 Stat. 1664, 2278
- 2008Amended · Pub. L. 110-343 · 122 Stat. 3832, 3834
- 2010Amended · Pub. L. 111-312 · 124 Stat. 3310
- 2013Amended · Pub. L. 112-240 · 126 Stat. 2340, 2343
- 2014Amended · Pub. L. 113-295 · 128 Stat. 4022
- 2015Amended · Pub. L. 114-113 · 129 Stat. 3073, 3075, 3114
- 2018Amended · Pub. L. 115-123 · 132 Stat. 149, 152
- 2018Amended · Pub. L. 115-141 · 132 Stat. 1198
- 2019Amended · Pub. L. 116-94 · 133 Stat. 3230, 3233
- 2020Amended · Pub. L. 116-260 · 134 Stat. 3055
- 2022Amended · Pub. L. 117-169 · 136 Stat. 1931, 1932, 1934, 1935, 1941
- 2025Amended · Pub. L. 119-21 · 139 Stat. 277, 278
A history note hasn’t been published yet. The record shows enactment by Pub. L. 108-357 on 2004-10-22.
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