Biodiesel Tax Credit Introduced to U.S. Senate

On February 28, the federal Biodiesel Tax Credit was introduced in the Senate as part of a tax extenders package. The bill proposes a $1.00 per gallon tax credit for biodiesel and biodiesel mixtures for 2018 and 2019. The bill also treats renewable diesel the same as biodiesel.

The Biodiesel Tax Credit has attempted to be re-enacted several times since its expiration in 2017. Initially, the credit was proposed as a five-year phase out plan and was attached to the Retirement, Savings, and Other Tax Relief Act of 2018. The bill, approved by the House at the end of December, was finalized with several of the initial matters but left off many of the tax extensions, including the Biodiesel Tax Credit.

Next, the Biodiesel Tax Credit was attached to the recent border wall funding act as a measure to push the extension through Congress. However, due largely to the fact that the act was extremely contentious, nearly all of the tax extensions, including the biodiesel tax credit, were omitted from the final version of the act. The introduction of the current version of the credit is the latest attempt in a long line of endeavors to pass the credit. Senator Grassley (IA) commented on this effort by stating, “Congress needs to get out of this bad habit of regular retroactive extensions of these tax provisions. The whole point of these federal tax incentives is to encourage certain behaviors, especially investments in alternative energies, energy efficiency and transportation. The best way to do that is ahead of time, not retroactively[.]”

The credit is part of the larger Tax Extender and Disaster Relief Act. The act proposes a total of 29 credits, 26 of which are credits that have lapsed since the year 2017. Also, in this legislative proposal would be an extension of the Oil Spill Liability Tax through 2019 (which would not be a retroactive tax). A summary of the bill can be found here and the full text of the bill can be found here.