On September 8, 2026, the IRS issued IR-2026-108 and Notice 2026-53, providing the 2026 emissions rate table and additional guidance for the Section 45Z Clean Fuel Production Credit.
What the IRS Announced
Section 45Z provides a credit for eligible clean transportation fuel produced in the United States and sold in a qualified sale. The credit generally depends on the fuel’s lifecycle greenhouse gas emissions rate, with lower-emission fuels potentially producing a larger credit.
The Working Families Tax Cuts amended and extended Section 45Z. According to the IRS, those changes require technical updates to the models used to determine emissions rates. Notice 2026-53 explains how producers should apply certain statutory changes while related modeling updates are underway.
What Notice 2026-53 Covers
The guidance includes:
- The emissions rate table for clean fuel produced in 2026
- Technical modeling language for manure-derived fuels
- A safe harbor involving qualifying regenerative agricultural practices for certain fuel produced in 2025
- Transition rules for fuel produced in 2025 and 2026 when an allowed methodology has not yet been updated
- Distinct treatment for transportation fuels derived from specified animal-manure feedstocks
The IRS also noted statutory changes that exclude indirect land-use-change emissions, restrict eligible transportation fuel to qualifying feedstocks produced or grown in the United States, Mexico, or Canada, and generally prohibit negative emissions rates except for fuel derived from animal manure.
Agricultural Practices and Feedstocks
For agricultural feedstocks, the notice allows taxpayers to account for qualifying low-carbon agricultural practices consistent with U.S. Department of Agriculture technical guidelines and the 45Z-specific Feedstock Carbon Intensity Calculator. Eligibility and the resulting emissions calculation depend on the fuel, feedstock, production period, and applicable methodology.
The 2026 table includes dairy and swine manure. Treasury and the IRS anticipate a later 2026 model update that would add poultry and beef manure as primary feedstocks. Taxpayers should use the guidance and models applicable to their own production and tax year rather than assuming that every agricultural activity qualifies.
Why It Matters for Small Business Owners
Most Schedule C filers will not qualify merely because they farm, raise livestock, or buy clean fuel. Section 45Z focuses on eligible producers of clean transportation fuel who make qualified sales, and its calculations are specialized. A potentially eligible producer should review Notice 2026-53 and the current Section 45Z rules with a qualified tax professional before claiming the credit.
Simple-C helps Schedule C filers keep ordinary business income and expenses organized — while specialized credits such as Section 45Z may require separate production, feedstock, emissions, and sale records.
This article provides general information, not tax advice. Clean fuel credit eligibility and calculations depend on current law and specific facts. Confirm the applicable requirements on IRS.gov and in Notice 2026-53.