SECTION 2. BACKGROUND

.01 Overview of § 45Z . Section 45Z, added to the Code by § 13704 of Public Law 117-169, 136 Stat. 1818, 1997 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), provides an income tax credit for clean transportation fuel produced domestically after December 31, 2024, and sold by December 31, 2027. The § 45Z credit is a general business credit under § 38.

To qualify for the § 45Z credit, a taxpayer must: (1) produce a transportation fuel that has a lifecycle greenhouse gas emissions rate (emissions rate) of not greater than 50 kilograms (kg) of CO2e per mmBTU ² and that satisfies certain suitability and coprocessing requirements; (2) produce the fuel in the United States at a qualified facility; (3) be registered as a producer of clean fuel under § 4101 at the time of production; and (4) sell the fuel to an unrelated person in a qualifying manner during the taxable year. See § 45Z(a)(1) & (4), (d)(4)-(5)(A), and (f)(1). A taxpayer

producing a transportation fuel that is sustainable aviation fuel (SAF transportation fuel) must also provide unrelated party certification demonstrating compliance with certain requirements. See § 45Z(f)(1) (A)(i)(II). A taxpayer is eligible to claim a § 45Z credit for the taxable year in which the taxpayer sells a transportation fuel. See § 45Z(a)(1)(A).

Under § 45Z(a)(1), a taxpayer calculates the § 45Z credit by multiplying the applicable amount per gallon or gallon equivalent with respect to a transportation fuel by the emissions factor for such fuel. The applicable amount varies depending on whether the transportation fuel is a SAF transportation fuel or a transportation fuel that is not a sustainable aviation fuel (nonSAF transportation fuel) and is higher for SAF transportation fuel than for non-SAF transportation fuel. Under § 45Z(a)(2) and (3), the applicable amount increases if the taxpayer produces transportation fuel at a qualified facility that satisfies the prevailing wage and apprenticeship (PWA) requirements. See § 1.45Z-3 of the Income Tax Regulations for applicable PWA requirements.

A transportation fuel’s emissions factor is a calculation of the fuel’s emission rate against the baseline emissions rate of 50 kg of CO2e per mmBTU. See § 45Z(b)(1) (A). A taxpayer determines a fuel’s emissions rate by using either the annual emissions rate table published by the Secretary of the Treasury or her delegate (Secretary) or a provisional emissions rate (PER) determined by the Secretary. See § 45Z(b) (1)(B) and (D).

.02 Section 45Z published guidance and FAQs .

(1) Notice 2022-58 (Request for Comments) . Notice 2022-58, 2022-47 I.R.B. 483 (released November 3, 2022), requested comments on § 45Z. ³ The comments received in response to Notice 2022-58 were considered in the drafting of this notice.

(2) Notice 2024-49 (Registration Requirements) . Notice 2024-49, 2024-26 I.R.B. 1781 (released May 31, 2024), pro

vides guidance on the § 45Z registration requirements, including the time, form, and manner of registration. Notice 202449 also provides initial definitions of SAF and non-SAF transportation fuels and an initial, non-exclusive list of primary feedstocks, to help taxpayers applying for registration identify fuels and primary feedstocks that may qualify for the § 45Z credit. Section 7 of this notice addresses the effect of this notice on Notice 202449. (3) Treasury Decision 9998 (PWA Requirements) . Treasury Decision 9998, published in the Federal Register at 89 FR 53184 (June 25, 2024), adopted final regulations on the PWA requirements under several sections of the Code (PWA Regulations). The PWA Regulations include § 1.45Z-3, which provides rules on the application of the PWA requirements to § 45Z.

(4) Fact Sheet FAQs . A § 45Z Fact Sheet, FS-2024-25 (released July 10, 2024), provides answers to certain frequently asked questions (FAQs) on the § 45Z registration requirements. This Fact Sheet is available at https://www.irs.gov/ newsroom/frequently-asked-questionsabout-applying-for-registration-for-theclean-fuel-production-credit-under-ss45z. (5) Notice 2025-11 . Notice 2025-11 provides guidance regarding methodologies for determining emissions rates under § 45Z and provides the initial emissions rate table required by § 45Z(b)(1)(B)(i). Notice 2025-11 is being released concurrently with this notice.