By: Damian Brunelis
On September 8, 2026, the IRS issued Notice 2026-53. The notice publishes the 2026 emissions rate table and provides technical guidance on statutory amendments affecting emissions accounting for manure-derived fuels, low-carbon agricultural practices, and certain transition rules.
Source: IRS IR-2026-108 (Sept. 8, 2026); IRS Notice 2026-53
What is the Section 45Z Credit
Section 45Z is a federal income-tax credit for qualifying clean transportation fuel produced in the United States by the taxpayer at a qualified facility and sold in a qualified sale. As amended, the credit is available for fuel produced after December 31, 2024, and before January 1, 2030. The credit amount is generally determined by the fuel’s lifecycle greenhouse-gas emissions rate. For non-SAF fuel, the statute uses GREET-based determinations; for SAF, it uses CORSIA methodologies or a qualifying similar methodology. The 45ZCF-GREET model was developed by Argonne National Laboratory and published by DOE.
Source: Internal Revenue Code section 45Z, as amended; IRS Notice 2026-53; IRS proposed regulations, REG-121244-23, 91 FR 5160 (Feb. 4, 2026).
Credit Value
The credit is calculated on a sliding scale: the lower the lifecycle emissions of the fuel, the higher the credit per gallon or gallon equivalent, as applicable.
Statutory applicable amounts, before the annual inflation adjustment:
For fuel produced on or before December 31, 2025, non-SAF transportation fuels: $0.20 per gallon or gallon equivalent.
For fuel produced on or before December 31, 2025, sustainable aviation fuel (SAF): $0.35 per gallon.
Increased statutory applicable amounts for facilities that satisfy prevailing wage and apprenticeship requirements, before the annual inflation adjustment:
For fuel produced on or before December 31, 2025, non-SAF transportation fuels: $1.00 per gallon or gallon equivalent
For fuel produced on or before December 31, 2025, SAF: $1.75 per gallon
For fuels produced after December 31, 2025, the statutory applicable amount is $0.20 or $1.00 for all transportation fuels, including SAF, before the annual inflation adjustment. The applicable amount is adjusted for the calendar year in which the qualified sale occurs.
For each eligible fuel category, the total Section 45Z credit is:
Total 45Z Credit ($) = Quantity of Eligible Fuel Sold in Qualified Sales (gallons or GGE) × Applicable Amount ($/gallon or $/GGE – inflation adjusted) × Emissions Factor
The emissions factor is:
Emissions Factor = (50 kg CO2e per MMBtu − Fuel Emissions Rate) ÷ 50 kg CO2e per MMBtu
The emissions factor is rounded to the nearest multiple of 0.1, and the resulting credit amount is rounded to the nearest cent.
Where a taxpayer has more than one fuel type, production pathway, or emissions rate, the taxpayer should calculate the credit separately for each category and add the resulting amounts.
For transportation fuel derived from animal manure (including dairy, swine, or poultry), the emissions rate may be negative under the post-2025 statutory exception. The resulting emissions factor can exceed one, which may produce a credit greater than the applicable amount; the calculation remains subject to the applicable statute, guidance, and substantiation requirements.
The credit is available only for eligible transportation fuel produced in the United States at a qualified facility and sold in a qualified sale. Under the proposed regulations, production generally requires more than minimal processing: blending a transportation fuel into another fuel to create a fuel mixture does not alone constitute production, and compression of compressed alternative natural gas that is already interchangeable with fossil natural gas does not constitute production. For fuel produced after December 31, 2025, the fuel must be derived exclusively from feedstocks produced or grown in the United States, Mexico, or Canada. In addition, no Section 45Z credit is determined for a taxable year beginning after July 4, 2025, if the taxpayer is a specified foreign entity, or for a taxable year beginning after July 4, 2027, if the taxpayer is a foreign-influenced entity, subject to the statutory exception incorporated into the definition of that term.
Potentially eligible fuels include renewable diesel, biodiesel, ethanol, SAF, hydrogen, and renewable natural gas (RNG). Eligibility depends on the statutory definitions, and the facts of the production pathway, facility, sale, and emissions rate.
Sources: Section 45Z of the Internal Revenue Code; IRS proposed regulations (91 FR 5160); DOE Alternative Fuels Data Center; Congressional Research Service IF12502
What Notice 2026-53 Provides
2026 Emissions Rate Table
The notice provides the 2026 emissions rate table, which identifies transportation-fuel categories (fuel type, primary feedstock, and production-pathway) and the allowed methodology used to calculate their emissions rates. If the applicable table does not establish an emission rate for the taxpayer’s fuel category, the producer may seek a Provisional Emissions Rate (PER) determination from the Secretary, subject to the governing requirements.
Source: IRS Notice 2026-53
Regenerative Agricultural Practices
For fuel produced in 2025, Notice 2026-53 allows use of the 2026 45Z-specific Feedstock Carbon Intensity Calculator (45ZCF FD-CIC), subject to its conditions, to determine emissions associated with feedstocks produced using qualifying low-carbon agricultural practices. Taxpayers must satisfy the applicable USDA technical guidelines, including chain-of-custody, audit, verification, and substantiation requirements.
USDA published its final Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks on June 29, 2026; the final rule became effective July 29, 2026. Notice 2026-53 stated that a 2026 version of 45ZCF FD-CIC was forthcoming. The subsequent September 2026 45ZCF-GREET model package incorporated the 45ZCF FD-CIC.
Source: IRS Notice 2026-53; USDA, Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks, 91 FR 39334 (June 29, 2026).
Source: IRS Notice 2026-53; USDA final rule on regenerative feedstock (June 29, 2026)
Manure-Derived Fuels
The notice provides distinct emissions-rate rules for transportation fuel derived from specific animal manure feedstocks, as required by the One, Big, Beautiful Bill Act (OBBBA). The 2026 emissions rate table includes dairy manure and swine manure as feedstock categories. The September 2026 45ZCF-GREET FAQ confirms that the model currently supports dairy and swine pathways only; DOE anticipates adding pathways for additional manure types, including poultry and beef cattle, in the future. The notice encourages producers of poultry- or beef-manure fuel to await that update before submitting a PER petition.
In specified circumstances, farm-specific prior manure management practices may be used within 45ZCF-GREET to determine a distinct emission rate for transportation fuel derived from animal manure. The results depend on the applicable model rules, feedstock, alternative-fate methodology, and substantiation. Farm-specific prior manure management practices depend on the animal manure, and may include manure storage in uncovered lagoons, deep pits, liquid/slurry, pasture/range/paddock, dry lot, and solid storage.
Source: IRS Notice 2026-53
Transition Relief
For fuel produced in 2025 and 2026, the requirements under 7 CFR 2100.060, regarding the pre-application development of a nutrient budget, are deemed satisfied for purposes of § 45Z. For fuel produced in 2025, it also provides a safe harbor for using the 2026 45ZCF FD-CIC, subject to the notice’s conditions. Taxpayers must still substantiate nutrient applications and measurable nutrient sources and removals used in the calculator and must retain records sufficient to substantiate the credit claim.
Source: IRS Notice 2026-53
2026 Timeline of Key 45Z Developments
February 4, 2026: Treasury and IRS published proposed regulations under Section 45Z, proposing rules for credit eligibility, emissions rates, certification, registration, and claims. The proposal is published at 91 FR 5160 and remains proposed.
June 12, 2026: US Department of Energy released the updated 45ZCF-GREET model for calculating fuel lifecycle emissions. Users should confirm the applicable model version for the taxable year and fuel pathway.
June 29, 2026: USDA published its final rule establishing technical guidelines for the production of regenerative agricultural biofuel feedstocks. The USDA also published an updated version of USDA FD-CIC.
September 8, 2026: IRS issued Notice 2026-53, providing the 2026 emissions rate table and guidance on regenerative practices, manure-derived fuels, and transition rules.
Still pending: The Section 45Z regulation remains under consideration by the IRS and Treasury Department. The 45Z-specific Feedstock Carbon Intensity Calculator (45ZCF FD-CIC) has been published and incorporated into the September 2026 revision of the 45ZCF-GREET model.
Sources: IRS proposed regulations (91 FR 5160); DOE 45ZCF-GREET model release; USDA final rule (June 29, 2026); IRS Notice 2026-53
Verification and Substantiation
The proposed regulations address separate substantiation pathways. For non-SAF fuel, they propose an emissions-rate safe harbor using certification in a form and manner similar to the SAF certification rules. Separately, they propose a qualified-sale safe harbor based on a purchaser certificate signed under penalty of perjury. SAF certification by an unrelated person remains a separate requirement. Because these are proposed regulations, the discussion should not characterize them as final requirements.
Source: IRS proposed regulations (91 FR 5160);
Industry Response
Following the release of Notice 2026-53, several industry organisations issued statements.
National Corn Growers Association President Jed Bower stated that NCGA looks forward to "working with the Treasury Department this fall as it looks to issue a final rule by November."
National Sorghum Producers Chair Amy France stated: "This is the certainty our industry has been asking for, and it gives farmers and fuel producers the confidence to move forward."
American Soybean Association Vice President Dave Walton stated: "These actions provide greater economic certainty for the biofuels industry, which is a critical source of domestic demand for U.S. soybeans."
Senator Roger Marshall (R-Kansas) described the 45Z guidance as "the biggest agricultural win of the year."
The American Biogas Council (ABC) stated that the new guidance "provided a clearer path for RNG producers to use the Section 45Z Clean Fuel Production Tax Credit" and that the guidance "incorporates several provisions ABC specifically advocated for." ABC indicated it will continue leading advocacy on 45Z and other federal tax policies affecting biogas and RNG.
Sources: Morning Ag Clips (September 10, 2026); Western Ag Network (September 10, 2026); Senator Marshall press release; American Biogas Council member update (September 10, 2026)