Month: August 2025

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OBBB changes reviewed: Over the next few weeks CFO Services will go through the business credits and incentives impacted by the bill.     

In Brief  

The One Big Beautiful Bill Act (OBBB, P.L. 119-21), signed into law on July 4, 2025, brings significant changes to the Section 45Z Clean Fuel Production Credit. The OBBB extends the 45Z credit for two additional years, tightens eligibility requirements, and introduces new restrictions on feedstocks, emissions rates, and foreign entity involvement. 

Key Takeaways: 

• Extension: The 45Z credit is now available for transportation fuel produced through December 31, 2029 (previously 2027). 

• Feedstock Sourcing: Starting in 2026, only fuel produced from feedstocks grown or produced in the US, Mexico, or Canada will qualify. 

• Emissions Rates: Negative emissions rates are prohibited for most fuels after 2025, except for certain animal manure feedstocks. 

• No Double Credits: Credits cannot be claimed for fuels produced from other fuels that already received a 45Z credit. 

• Foreign Entity Restrictions: Credits are denied to specified foreign entities and, after a two-year phase-in, to foreign-influenced entities. 

• Transferability: Transfer of credit is still allowed, but not to specified foreign entities. 

What is Section 45Z? 

Section 45Z provides a production tax credit (PTC) for clean transportation fuels produced in the US and sold to unrelated parties. The credit amount is based on the fuel’s lifecycle greenhouse gas (GHG) emissions, with higher credits for lower-emission fuels. Sustainable aviation fuel (SAF) and non-SAF transportation fuels are both eligible, subject to specific requirements. 

Key OBBB Changes to 45Z Clean Fuel Credit 

1. Extension of Credit Period 

Prior Law: Credit available for fuel produced and sold from 2025 through 2027. 

OBBB: Credit period extended through 2029

2. Feedstock Sourcing Requirement 

New Rule: For fuel produced after December 31, 2025, only feedstocks grown or produced in the US, Mexico, or Canada are eligible.  

Impact: Producers must review and potentially adjust supply chains to ensure compliance.

3. Emissions Rate Adjustments 

Negative Emissions: Prohibited for most fuels after 2025, except for animal manure-derived fuels (which may still have negative rates as determined by the IRS). 

Indirect Land Use Change: Emissions rates must exclude indirect land use change, providing more certainty for taxpayers.

4. No Double Credits 

Restriction: No 45Z credit for fuel produced from another fuel that already received a 45Z credit.  

5. Sustainable Aviation Fuel (SAF) 

Excise Tax Credit: The Section 6426(k) SAF excise tax credit is terminated after September 30, 2025. 

Parity: After 2025, SAF receives the same 45Z credit rate as other transportation fuels.  

6. Foreign Entity Restrictions 

Specified Foreign Entities: No credit for fuel produced by specified foreign entities after enactment. 

Foreign-Influenced Entities: No credit after two years for entities meeting certain foreign ownership or control thresholds.  

7. Transferability 

Allowed: Credits can be transferred, but not to specified foreign entities.  

Key Changes, Deadlines, and Restrictions 

Feature	Prior Law (IRA)	OBBB (as Enacted)
Credit Period	2025–2027	2025–2029
Feedstock Sourcing	No restriction	US/Mexico/Canada only (2026+)
Negative Emissions Allowed	Yes	No (except animal manure)
Transferability	Yes	Yes (not to foreign entities)
Foreign Entity Restrictions	None	Yes (phased in)

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein. 

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OBBB changes reviewed: Over the next few weeks CFO Services will go through the business credits and incentives impacted by the bill.     

In Brief  

•  The One Big Beautiful Bill Act (OBBB) extends the deadline to begin construction for Section 45V hydrogen projects from December 31, 2025 (House proposal), to December 31, 2027 (Senate-enacted), giving developers two additional years to qualify for the credit. 
• Credit Value and Structure Unchanged: The maximum credit remains at $3/kg for clean hydrogen, with a 10-year credit period and continued options for direct pay and transferability (except to certain foreign entities). 
• Action Required: Projects must start construction before January 1, 2028, to secure eligibility. Sponsors should review project timelines and ownership, and monitor for further IRS guidance on emissions measurement and foreign entity definitions. 

OBBB Legislative Update: Section 45V Hydrogen Credit 

The One Big Beautiful Bill Act (OBBB, P.L. 119-21) was signed into law on July 4, 2025, bringing sweeping changes to federal tax credits and incentives for clean energy, including the Section 45V hydrogen production credit. The OBBB modifies the eligibility window and phase-out schedule for the 45V credit, with significant implications for project developers and investors. 

What is Section 45V? 

Section 45V provides a production tax credit (PTC) for clean hydrogen produced at facilities with low lifecycle greenhouse gas emissions. The credit is available for 10 years after a facility is placed in service, with the amount determined by the emissions intensity of the hydrogen produced (up to $3/kg for the cleanest hydrogen) .  

Key OBBB Changes to 45V Hydrogen Credit 

On July 7, 2025, President Trump issued an executive order directing the Treasury Department to halt all regulatory and guidance projects related to clean energy tax credits under Sections 45Y and 48E, as revised by the One Big Beautiful Bill (OBBB). The order mandates the termination of wind and solar tax credits and calls for stricter enforcement of “beginning of construction” rules—specifically to prevent artificial acceleration of eligibility and limit the use of broad safe harbors unless substantial construction has occurred.   

OBBB Legislative Recap: Clean Energy Credits 

1. Extension of Construction Start Deadline 

• Prior Law: Facilities had to begin construction by December 31, 2032, to qualify. 

• House Bill: Proposed to terminate the credit for facilities beginning construction after December 31, 2025. 

• Senate Bill (Enacted): Extends the deadline—facilities must begin construction before January 1, 2028 to qualify for the 45V credit.  

Result: The OBBB gives the hydrogen industry two additional years to start construction and still claim the credit, compared to the House proposal. 

2. No Change to Credit Value or Structure 

• The maximum credit remains at $3/kg for hydrogen produced with emissions ≤0.45 kg CO₂e/kg H₂. 

• The 10-year credit period and direct pay/transferability options are retained for projects that qualify. 

3. Transferability and Direct Pay 

• The Senate bill does not repeal elective transferability or direct pay for 45V credits, but transfer to specified foreign entities is prohibited upon enactment . 

Key Changes, Deadlines, and Restrictions 

Feature	Prior Law (IRA)	OBBB (as Enacted)
Max Credit Value	$3/kg	$3/kg
Construction Start Deadline	12/31/2032	12/31/2027
Credit Period	10 years	10 years
Transferability/Direct Pay	Yes	Yes (with restrictions)

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.