IRS Proposed 45Z Regulations: Key Recordkeeping, Certification, and Feedstock Rules for Fuel Producers

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On February 3, 2026, the U.S. Department of the Treasury and the Internal Revenue Service released proposed regulations for the clean fuel production tax credit under IRC section 45Z, which were published in the Federal Register the following day. The proposals clarify how producers demonstrate eligibility, calculate the credit amount, and substantiate emissions rates and "qualified sales". It also introduces safe harbors designed to reduce audit risk on those issues.

Eligibility and credit amount hinge on records

The proposed regulations make one thing clear: taxpayers claiming the section 45Z credit need to keep thorough records that establish both that each fuel qualifies and the amount of credit being claimed. This matters because the 45Z credit amount is tied to life-cycle emissions rates, which can shift year-to-year depending on feedstocks, process energy, carbon capture, and other operational factors. 

Specifically, producers will need to be able to demonstrate:

1. That each product constitutes “transportation fuel” within the meaning of section 45Z, is suitable for use in a highway vehicle or aircraft, and demonstrates practical and commercial fitness for that use (for example, ASTM D975 for diesel fuel, ASTM D4814 for gasoline, or ASTM D1655 for jet fuel).
2. The primary feedstock or feedstocks used to produce each fuel, including precise identification of feedstock type (for example, corn starch, soybean oil, tallow, used cooking oil) and documented origin sufficient to demonstrate compliance with the requirement that post‑2025 qualifying fuel be derived exclusively from feedstock produced or grown in the United States, Canada, or Mexico, as applicable.
3. Compliance with any additional fuel‑quality and specification standards applicable to the relevant fuel type (for example, ASTM D975 for on‑road diesel, ASTM D4814 for motor gasoline, ASTM D1655 or DEF STAN 91‑091 for conventional jet fuel, and ASTM D7566 plus appropriate annex for synthetic blending components used in SAF) as ​​described in Section 1.45Z 1(b)(24) or (30)
4. The methodology by which the life‑cycle greenhouse gas emissions rate for each fuel was determined, including identification of any applicable fuel “type” and “category” in the 45ZCF‑GREET model or other approved methodology, a record of all model inputs and assumptions (for example, energy consumption, process configuration, carbon capture parameters, transport distances), and retention of the resulting model output and supporting calculation files.
5. Any laboratory or field testing performed on the fuel, including but not limited to tests of density, heating value, sulfur content, aromatics, cold‑flow properties, and other compositional or performance parameters that support product quality, specification compliance, or emissions‑related assumptions.
6. That each production facility meets the definition of a “qualified facility,” including facility‑level registration or other identifying information, documentation of the placed‑in‑service date for federal income tax purposes, nameplate capacity or design throughput, and any modifications relevant to emissions‑rate determinations.
7. That each disposition of fuel constitutes a “qualified sale,” supported by documentation of the purchaser’s identity, the nature of the purchaser’s use (for example, use in producing a fuel mixture, direct use in the purchaser’s trade or business, or resale at retail and placement into another person’s fuel tank), the timing and volume of the sale, and evidence that the purchaser is not related to the taxpayer within the meaning of the Internal Revenue Code.
8. Establishing that certification was conducted by an unrelated person, including sustainable aviation fuel emissions‑reduction certifications and third‑party emissions‑rate certifications for 45ZCF‑GREET pathways, together with the certifier’s accreditation credentials, the effective period and scope of the certification, and supporting documentation for the information on which the certification is based.
9. All information, including underlying raw operational and measurement data, engineering assumptions, and correspondence, submitted with or relied upon in connection with any petition for a Provisional Emissions Rate (PER), as well as any determinations or approvals issued in response.
10. Additional: for taxpayers claiming the increased credit amount based on satisfaction of prevailing wage and apprenticeship requirements, payroll records, contracts, certifications, and other documentation sufficient to demonstrate compliance with applicable labor standards for the relevant facilities and tax years.

Taken together, this points to documentation that needs to be organized, complete, and traceable across the entire production and sales cycle — not assembled after the fact.

Two explicit safe harbors: emissions rates and qualified sales

The proposed regulations introduce two safe harbors that weren't part of Notice 2025-10: one for substantiating emissions rates for non-SAF fuels using 45ZCF-GREET, and another for confirming that a sale qualifies as a "qualified sale."

Safe harbor #1: emissions-rate substantiation for non-SAF fuels

For transportation fuels other than sustainable aviation fuel whose life-cycle emissions rate is determined using the 45ZCF-GREET model, taxpayers can substantiate that emissions rate by obtaining a certification from a qualified third party — in substantially the same manner required for SAF under proposed regulation section 1.45Z-5. The certifier validates the emissions rate output of 45ZCF-GREET, and if other conditions are met, that certification serves as sufficient substantiation.

This gives non-SAF producers a structured verification pathway similar to what SAF producers already use, rather than relying solely on internal modeling workpapers to support the life-cycle emissions rate.

Safe harbor #2: substantiating a "qualified sale"

The proposed regulations also provide a safe harbor for confirming whether a sale is a "qualified sale." Under this safe harbor, a sale of transportation fuel to an unrelated person is treated as a qualified sale if the producer:

• Obtains a written purchaser certificate, signed under penalty of perjury, in substantially the same form as the model certificate in the proposed regulations.
• For a single purchase, receives the certificate prior to or at the time of the sale. For purchases covering a period, receives the certificate prior to or at the same time as the initial sale covered by that certificate.
• Has no reason to believe that any information in the certificate about the purchaser's intended use of the fuel is false, and retains the certificate in its books and records.

The model purchaser certificate requires the buyer to certify, under penalty of perjury, that the fuel will be used in the production of a fuel mixture, used in the purchaser's trade or business, or sold at retail and placed in a customer's fuel tank — and that the purchaser is unrelated to the taxpayer.

For producers, this effectively makes the purchaser certificate a standard piece of contracting and invoicing documentation. Lock it in at the point of sale, and you don't need to trace downstream fuel use transaction by transaction.

SAF-specific certification requirements

Section 45Z retains the statutory requirement that, for sustainable aviation fuel, the life-cycle emissions reduction must be established through certification by an unrelated party. The proposed regulations spell out that requirement in detail.

Annual, facility-level certification and forms

Taxpayers claiming the credit for SAF must obtain a certification for each taxable year in which they claim the credit for SAF produced at a qualified facility. That certification must be specific to the particular facility and year, and must be attached to the taxpayer's clean fuel production credit filing — using Form 7218, Clean Fuel Production Credit — in accordance with the form instructions.

Qualified certifiers by methodology

Who can serve as a "qualified certifier" depends on the emissions methodology being used:

• CORSIA Default or CORSIA Actual values: The certifier must hold active accreditation from ISCC, RSB, ClassNK, or another sustainability certification scheme approved under ICAO's CORSIA framework.
• 45ZCF-GREET for SAF: The certifier must be accredited by the ANSI National Accreditation Board (ANAB) to validate or verify under ISO 14065, or be accredited as a verifier or verification body under the California Air Resources Board Low Carbon Fuel Standard program.

Timing: "timely certification"

The certification must be signed and dated by the qualified certifier no later than the due date (including extensions) of the tax return for the year in which the SAF is sold in a qualified sale — or by the filing date of any amended return or Administrative Adjustment Request for that year. Certifications obtained after that deadline won't be valid for that year's credit claim under the proposed framework.

For SAF producers, this means third-party certification needs to be treated as a gating item in the return filing calendar, not an after-the-fact compliance step. Plan accordingly.

Foreign feedstocks, imported UCO, and the North American sourcing rule

The proposed regulations incorporate changes from the One Big Beautiful Bill Act (OBBBA) and confirm that transportation fuel produced after December 31, 2025, must be exclusively derived from feedstock produced or grown in the United States, Mexico, or Canada to qualify for the 45Z credit. Fuel produced from feedstocks sourced outside North America is not eligible for section 45Z for post-2025 production years.

The commentary accompanying the proposals flags particular concerns about distinguishing imported used cooking oil (UCO) from palm-derived oils and about the risk of crediting ineligible foreign feedstocks. Current guidance also makes clear that, for fuel produced after December 31, 2025, 45ZCF-GREET pathways are limited to feedstocks produced or grown in the United States, Canada, or Mexico — and that pathways involving foreign feedstocks, including imported UCO, will require additional guidance before they can be modeled.

Treasury and IRS have specifically requested comments on appropriate substantiation and recordkeeping for feedstocks imported from Canada and Mexico, including how taxpayers can demonstrate origin in a way that reflects real-world industry practices without being unduly burdensome.

For producers relying on imported or aggregated UCO, this means more intensive chain-of-custody documentation and origin tracing will be needed — and further technical guidance should be expected before foreign-feedstock pathways can be modeled for 45Z purposes.

Timing for comments and public hearing; practical next steps

The proposed regulations set a public hearing for May 28, 2026, at 10:00 a.m. Eastern Time. Written comments and requests to speak (with hearing outlines) are due by April 6, 2026, consistent with the 60-day period following Federal Register publication.

Even before the rules are finalized, producers can start preparing with the proposed framework now:

• Maintain strong recordkeeping and traceability for items in the proposed regulation: transportation fuel status, feedstocks and origin, specifications, emissions methodology and supporting data, facility qualification and in-service dates, qualified sales, certifications, PER information, and prevailing wage and apprenticeship records.
• Decide whether to operationalize the safe harbors — by standardizing third-party emissions certifications for 45ZCF-GREET pathways and embedding the model purchaser certificate into contracting and invoicing workflows.
• For SAF producers, confirm that chosen certifiers hold the required accreditations for the intended methodology, and back-plan certification engagements so they're completed ahead of return due dates, including extensions.
• For producers using UCO or other potentially foreign feedstocks, tighten chain-of-custody controls and documentation now to demonstrate that post-2025 feedstocks are North American in origin, and keep a close eye on follow-on guidance around foreign feedstock pathways.

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