With Congress returning to Capitol Hill for a lame-duck session to close out 2024, the Minnesota Soybean Growers Association (MSGA) joined three dozen advocacy organizations in November in issuing a letter to federal lawmakers urging the extension several expiring tax credits.
“As you know, beginning January 1, 2025, and following enactment of the Inflation Reduction Act of 2022 (PL 117-169), the tax code institutes a planned shift from the longstanding structure of energy tax incentives flowing from the Energy Policy Act of 2005 toward a new ‘technology-neutral’ energy tax regime,” the groups wrote. “This new regime, anchored by the Section 48E clean electricity investment tax credit, 45Y clean electricity production tax credit, and 45Z clean fuels credit, will represent a significant change for which many of our companies and industries have spent much of 2024 planning. Unfortunately, the Treasury Department has not yet implemented final regulations for any of these policies, meaning we approach 2025 with significant uncertainty.”
The letter specifically asks Congress to extend the 40A biodiesel tax credit, the 40B sustainable aviation fuel (SAF) tax credit, the 40(b)(6) second generation biofuel producer credit, the 48(c)(1) qualified fuel cell investment tax credit, the 48(c)(7) qualified biogas investment tax credit and the 6426 ,6427 alternative fuel tax credit.
“Particularly given the upcoming 2025 tax policy debate, enacting a modest, short-term tax package this fall would help to ensure energy and agriculture market stability and predictability while preserving grounds for an open energy and tax debate in the 119th Congress,” the groups wrote.
Without the certainty of extending these vital tax credits, the groups state that American consumers are likely to face increased energy and fuel prices. Impacted businesses would face regulatory, legal and tax filing limbo.
“The combination of these effects would be economic headwinds at a time when Congress and tax-writers are attempting to consider more broad, holistic reforms and extensions in the tax system,” the groups added.
The White House also continues to push the Treasury Department to release 45Z tax guidance by the end of 2024, but the American Soybean Association is concerned that interim guidance or a safe harbor will result in a significant tax credit disparity between soy-based and used cooking oil-based biofuels, without offering any mechanism for soy to improve its carbon intensity score – either through updated modeling or climate-smart agriculture practices.
