The Internal Revenue Service this week issued long-awaited guidance on the Section 45Z Clean Fuels Production Tax Credit.

The guidance includes the technical modeling updates to the 45ZCF-GREET model used to determine emissions rates required under the Working Families Tax Cuts (WFTC) amended and extended section 45Z and implements additional changes including addressing how the annual emissions rate tables work and which table and models a producer should use to determine the emissions rate of a particular fuel.

National Corn Growers Association President Jed Bower says the guidance will give safe harbor to previously recognized “on farm” practices in reducing the carbon intensity of qualifying fuels. “This guidance also codifies positive changes to the credit regarding indirect land use change. We look forward to working with the Treasury Department this fall as it looks to issue a final rule by November. NCGA would also like to see ‘book and claim’ acknowledged as a viable chain of custody methodology in the final rule.” Book and claim allows farmers to sell the environmental value of their low-carbon corn directly to biofuel producers digitally, eliminating the need to physically segregate and transport those crops to a specific facility.

Biofuel producers and farmers have been working to prepare for the 45Z tax credit since 2022 when it was first created by the Inflation Reduction Act, then changed under the One Big Beautiful Bill Act last year. The tax credit was a big topic at the recent ACE Annual Conference where CPA Rebecca Johnson of Christianson PLLP talked about how they have been working with producers to help them prepare.

“Documentation is going to be the key,” said Johnson. “So farmers have to do things from keeping receipts or keeping packaging from fertilizer to getting geo-coordinates to getting pictures of the fields, what they looked like to prove that they didn’t do things like no-till. And it’s definitely a lot that they haven’t had to do in the past. And so just education and making sure they’re ready to go is going to be key.”

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Rebecca Johnson, Christianson PLLP 4:10