What to Know About the Section 45Z PTC Proposed Regulations

The U.S. Department of the Treasury and IRS published proposed regulations on February 6, 2026, regarding the clean fuel production tax credit (PTC) under Section 45Z of the Internal Revenue Code. The proposed regulations allow reliance thereon until final regulations are published in the Federal Register, provided that taxpayers follow them in their entirety and in a consistent manner. Comments are requested by April 6, 2026.

General Background

Under Section 45Z of the Internal Revenue Code, a PTC is available for each gallon or gallon equivalent of transportation fuel produced after December 31, 2024, and sold before January 1, 2030. The credit amount generally equals up to $1 per gallon or gallon equivalent, depending on the emissions factor of the fuel, although higher amounts are available for fuel derived from animal manure produced after December 31, 2025, and were available prior to January 1, 2026, for sustainable aviation fuel (SAF) and non-SAF fuel where the carbon intensity score was below zero. The credit amount is reduced to one-fifth of the otherwise available amount if prevailing wage and apprenticeship requirements are not satisfied.

The One Big Beautiful Bill Act (OBBB) imposed new prohibited foreign entity (PFE) and foreign feedstock limitations for purposes of claiming the Section 45Z PTC beginning taxable years after enactment, generally January 1, 2026. (See Holland & Knight's previous alert, "One Big Beautiful Bill Act to Scale Back Clean Energy Tax Credits Under Inflation Reduction Act," updated July 7, 2025.)

The Treasury Department and IRS previously released initial Section 45Z PTC guidance on January 10, 2025, in the form of Notice 2025-10, which included a notice of intent to propose regulations on the Section 45Z PTC, as well as Notice 2025-11, and provided the annual emissions rate table for Section 45Z PTC that referred taxpayers to the appropriate methodologies to determine the life cycle greenhouse gas (GHG) emissions of their fuel. (See Holland & Knight's previous alert, "Treasury Department, IRS Release Section 45Z Clean Fuel PTC Guidance," January 10, 2025.) The U.S. Department of Energy (DOE) also has released versions of the 45ZCF-GREET model.

Key questions about the proposed regulations are addressed below.

Proposed Regulations Under Section 45Z

General Credit Eligibility

Who Can Claim the Credit?

The claimant is the person who is the producer of the clean transportation fuel and is registered under Section 4101 as the producer of the fuel at the time of its production or treated as the registrant solely for filing the claim (i.e., the regarded owner of a disregarded entity that is the registered producer, the S‑corporation parent of a registered qualified subchapter S subsidiary (QSub) or the common parent of a consolidated group where a member is the registered producer).

The fuel must be produced in the U.S. (including territories) and sold in a qualified sale during the credit period, with timing and unrelated‑person rules applied per the proposed regulations. Under OBBB, no Section 45Z PTC is determined for taxable years beginning after July 4, 2025, if the taxpayer is a specified foreign entity (SFE) and for taxable years beginning after July 4, 2027, if the taxpayer is a foreign‑influenced entity (FIE).

Beginning with fuel produced after December 31, 2025, the statute also requires exclusive use of North American feedstocks (U.S., Mexico or Canada), effectively narrowing eligibility to taxpayers who can substantiate compliant supply chains. These constraints operate in addition to the "qualified sale" and anti‑stacking limitations discussed below.

Who Is Treated as the "Producer" of Clean Fuel?

The producer is the person who performs the substantial processing that creates the transportation fuel from primary feedstocks. Ownership of the facility is not required if the taxpayer can substantiate it performed the production activities and made a qualified sale.

For example, for renewable natural gas (RNG), the producer is the processor that removes water, carbon dioxide (CO₂) and impurities so the gas is interchangeable with fossil natural gas. A party that only compresses already-interchangeable gas is not a producer.

Further, activities that do not result in chemical transformation – such as blending, adding stabilizers or dehydrating imported hydrous ethanol (a non-qualifying step) – are not production. In tolling or contract-manufacturing structures, production is attributed to the party that undertakes the qualifying processing steps (that may or may not be the owner of the facility).

What Is "Production"?

Production encompasses the full chain of substantial processing from primary feedstock handling through creation of a fuel that is suitable for use (or blending into a fuel that is suitable) in a highway vehicle or aircraft, measured at the point where no further processing is required before a qualified sale. It requires chemical transformation or comparable substantial processing; minimal or administrative steps do not qualify. For RNG, upgrading of biogas constitutes production; for liquid fuels, production ends before distribution, storage or post-production handling.

What if More Than One Person Has an Ownership Interest in the Facility?

If multiple persons share ownership of a facility that is not a partnership for federal tax purposes, production (and thus, the Section 45Z PTCs) is allocated in proportion to each owner's interest in the gross sales from the facility. If the facility is owned through an unincorporated organization that has made a valid Section 761(a) election, each member's undivided interest is treated as a separate facility for Section 45Z purposes, allowing direct measurement and claiming.

What Is Included in the Qualified Facility?

A "facility" is a single production line, including all components that function interdependently to produce the transportation fuel and that drive the life cycle emissions rate used to determine the credit. Components can be geographically separated if they are interdependent.

A "facility" explicitly excludes feedstock‑related equipment, electricity‑generation equipment used to power the production process and any equipment used to condition, blend, pressurize, transport or otherwise handle fuel beyond the point of production. The "qualified facility" overlay then applies anti‑stacking screens each year to determine whether production from that facility can generate Section 45Z PTCs for that taxable year.

What Are the Anti-Stacking Rules Within the Definition of a "Qualified Facility"?

A facility is not a "qualified facility" for any taxable year where a credit under Section 45V, a Section 48(a)(15) election or Section 45Q is allowed with respect to that facility. The determination is made separately for each taxable year, so a facility may qualify for Section 45Z in one year and fail in the next, depending on which credit is actually allowed in that year. This preserves taxpayer choice where the statute permits. A Section 48(a)(15) election is irrevocable and, once made, permanently disqualifies the facility from being a Section 45Z qualified facility in the election year and all subsequent years, so hydrogen co‑located projects must model long‑run tradeoffs before electing. For Section 45Q, if carbon capture is allowed "with respect to the facility" for the year, Section 45Z is unavailable.

Is Carbon Capture Equipment Part of the Facility?

Carbon capture equipment is included in the facility if it contributes to the life cycle GHG emissions rate used to determine the Section 45Z PTC for the produced fuel. Conversely, carbon capture equipment associated solely with electricity‑generation equipment that powers production, as well as feedstock‑related equipment upstream of production, is excluded from the facility boundary under the general exclusions for electricity production and feedstock equipment. If carbon capture equipment is included in the facility because it contributes to the life cycle GHG emissions rate and a Section 45Q credit is allowed for that captured carbon in a taxable year, anti‑stacking should disqualify the facility from eligibility for Section 45Z PTC for that year. In contrast, if excluded, a Section 45Q claim at a third‑party power plant should not taint the eligibility of the Section 45Z facility.

Fuel Characteristics

Does the Fuel Have to Be Used as a Transportation Fuel?

To be eligible under Section 45Z, the fuel does not need to be actually used as a transportation fuel in a highway vehicle or aircraft – it only needs to be suitable for use. "Suitable for use" means that the fuel has practical and commercial fitness for use as a fuel in a highway vehicle or aircraft, or may be blended into a fuel mixture that has practical and commercial fitness for use as a fuel in a highway vehicle or aircraft. Diesel fuel that has a practical and commercial fitness for use as a fuel in a highway vehicle or aircraft but is ultimately used in a marine vehicle would be considered suitable for use.

How Can a Taxpayer Demonstrate That Fuel Is Suitable for Use as a Transportation Fuel?

A fuel is suitable for use at the point at which no further production, refinement or other step is necessary before the fuel may be sold in a qualified sale.

The proposed regulations include categories of non-SAF transportation fuels that qualify as transportation fuels, which were first introduced in Notice 2024-49. These categories generally include an appropriate American Society for Testing and Materials (ASTM) specification that must be met to qualify as a transportation fuel for each category of fuel. Meeting such ASTM specification can help demonstrate a fuel's practical and commercial fitness for use as a fuel in a highway vehicle or aircraft.

How Does the Taxpayer Measure Fuel for Purposes of Calculating the Section 45Z PTC?

The volume of a liquid fuel is measured on the basis of gallons adjusted to ambient pressure and temperature of one atmosphere and 60 degrees Fahrenheit. Section 45Z directs taxpayers to use a gallon equivalent for nonliquid fuels but does not provide a baseline standard. The Treasury Department and IRS note that gasoline is the most appropriate baseline fuel for a gallon equivalency for nonliquid fuels, as gasoline is the most common transportation fuel, and Section 45Z is designed to incentivize cleaner transportation fuels as alternatives to existing fossil fuels. The proposed regulations indicate that a lower heating value of gasoline, rather than a higher heating value, should be used because it is a better representation of the useful energy provided by a transportation fuel.

What Does "Gasoline Gallon Equivalent" Mean?

Section 45Z is a per gallon or gasoline gallon equivalent credit. The term "gallon equivalent" means, with respect to any nonliquid fuel, the amount of such fuel that has the energy equivalent of a gallon of gasoline, which refers to the amount of such fuel having a British thermal unit (BTU) content of 116,090 (lower heating value). A "nonliquid fuel" is a fuel in a gaseous state at ambient pressure and temperature of one atmosphere and 60 degrees Fahrenheit, respectively.

Is a Taxpayer Still Eligible if They Blend Transportation Fuel with a Fossil Fuel?

The proposed regulations clarify that if a fuel, which meets the definition of a transportation fuel and the other requirements of Section 45Z is blended with other fuels that do not qualify as a transportation fuel (i.e., fossil fuels), and such blended fuel is sold in a qualifying sale, the producer of the transportation fuel is still eligible for a Section 45Z credit based on the gallons of transportation fuel used in the blended fuel that is ultimately sold.

Can RNG Still Qualify Even if It's Not Compressed to Meet ASTM D8080?

Yes. Compressed alternative natural gas (CANG) would be deemed "suitable for use" once it is produced so that it is interchangeable with fossil natural gas and would require only minimal processing (i.e., further compression or liquefaction) to meet the ASTM D8080 specification.

Is a Taxpayer Still Eligible for the Section 45Z PTC on a Fuel Produced Using Another Section 45Z-Eligible Transportation Fuel as a Feedstock?

The OBBB amended Section 45Z by removing from the definition of transportation fuel any fuel derived from another fuel for which a Section 45Z credit is allowable. The preamble to the proposed regulations states that this rule ensures that only the first transportation fuel in a production chain qualifies for the Section 45Z credit. However, if that first transportation is used as a process fuel or other non-primary feedstock input in producing the second transportation fuel, and not as a primary feedstock, the second transportation fuel could still qualify for a Section 45Z credit.

Is Fuel Produced Using Imported Used Cooking Oil (UCO) Eligible for the Credit?

In the preamble to the proposed regulations, the Treasury Department and IRS expressed concern about the ability to reliably distinguish between imported UCO and palm oil and the risk of allowing ineligible fuels based on feedstocks that do not originate from the U.S., Mexico or Canada. After December 31, 2025, pathways that use foreign feedstocks will not be available in the 45ZCF-GREET model until the Treasury Department and IRS publish further guidance. The agencies have requested comments on possible approaches to substantiate that such UCO meets the statutory sourcing requirement.

Determining the Emissions Rate

How Is the Emissions Rate of Non-SAF Transportation Fuel Determined?

The emissions rate is determined using the 45ZCF-GREET model, which uses "well-to-wheel" emissions to calculate life cycle GHG emissions for all stages of fuel production, as well as emissions resulting from use of the fuel in transportation.

What Version of the GREET Model Is Required?

Taxpayers must use the most recent version of the 45ZCF-GREET model that is publicly available on the first day of the taxable year that the taxpayer produced the transportation fuel for which the credit is claimed, which includes both the type and category of transportation fuel produced. If such version does not include a type and category of fuel but a later version issued in the same year includes such type and category of fuel, the later version must be used. An election can be made to use a newer GREET model that is released in the same year that includes a type and category of fuel that previously was identified in an earlier model.

What Methodology Is Required to Be Used to Calculate the GHG Emissions for SAF?

If a type and category of SAF transportation fuel is established in the emissions rate table, a taxpayer would determine the fuel's emissions rate using the most recent version of (1) the CORSIA Default Life Cycle Emissions Values for CORSIA Eligible Fuels life cycle approach (CORSIA Default) or the CORSIA Methodology for Calculating Actual Life Cycle Emissions Values life cycle approach (CORSIA Actual) or 2) the 45ZCF-GREET model.

How Should a Taxpayer Round the Emissions Rate?

If the emissions factor of a transportation fuel is not a multiple of 0.1, a taxpayer must round such amount to the nearest multiple of 0.1. A taxpayer must round up if the digit in the hundredths place is a five or higher, and round down if the digit in the hundredths place is less than five. For example, if the emissions rate of a taxpayer's fuel is initially calculated as 0.575 using the methodology in Section 45Z(b)(1)(A), the taxpayer must round their emissions rate to the nearest multiple of 0.1, rounding up to 0.6 since the value in the hundredths (i.e., seven) is greater than five.

What if the Fuel Is Not Listed on the Emissions Rate Table?

A taxpayer producing a fuel can use the provisional emissions rate (PER) process if the transportation fuel that it is producing is a novel type of fuel not established in the emissions rate table or if the type of fuel is established in the emissions rate table, but such fuel is produced using a pathway or primary feedstock not established in the applicable emissions rate table. A taxpayer cannot use the PER process if the taxpayer disagrees with the background data (i.e., underlying assumptions) in the model.

A taxpayer must first submit an emissions value request (EVR) to the DOE for an emissions value for an eligible fuel. The DOE will not evaluate an EVR if the taxpayer's type and category of fuel are included in the applicable emission rate table and the most recent version of the allowed methodologies provided in Section 45Z. The taxpayer will then receive a calculated emissions value letter (CEVL) from the DOE for such fuel.

The taxpayer may then file a PER petition for the eligible fuel that is the subject of the CEVL, attached to its Form 7218 included with the taxpayer's timely filed federal income tax return for which the taxpayer claims the Section 45Z credit. A taxpayer may rely upon an emissions value provided in a CEVL for purposes of calculating and claiming the Section 45Z credit on the form 7218, provided that all information, representations or other data provided to the DOE in support of the EVR are accurate. Notably, the DOE has not yet provided guidance on the process for obtaining an EVR.

Can I Offset Some of My Emissions with Renewable Energy Certificates (RECs)?

For purposes of accounting for emissions associated with hydrogen as a production input, natural gas alternatives as a production input or as the transportation fuel produced, electricity and carbon capture and sequestration, rules similar to the rules under Section 45V apply, unless otherwise specified by the 45ZCF-GREET model with respect to technical modeling issues identified by the DOE or technical differences in applying the Section 45V rules to the 45ZCF-GREET model.

The proposed regulations clarify that with respect to the use of an EAC or REC within the 45ZCF-GREET model, a taxpayer must still meet the "three pillars" of the Section 45V rules, which consist of the incrementality, temporal matching and deliverability requirements. The Section 45V rules provide that the incrementality test requires that the electricity generating facility producing the unit of electricity to which the EAC or REC relates to must have a Commercial Operations Date (COD) that is no more than 36 months before the first day of the taxable year that the facility for which the EAC or REC is retired is placed in service.

The Treasury Department and IRS clarify that for purposes of the incrementality test, a taxpayer's facility is considered placed in service in the first taxable year it produces a transportation fuel. As such, the electricity generating facility that produced the unit of electricity to which the EAC or REC relates must have a COD that is no more than 36 months before the first day of the taxable year that the facility first produced a transportation fuel.

The Treasury Department and IRS did not further clarify the applicability of the temporal matching and deliverability requirements as applied to the application of EACs and RECs to the 45ZCF-GREET model.

Is There a Way to Safe Harbor the Carbon Intensity (CI) Score?

The proposed regulations provide a substantiation safe harbor for non-SAF transportation fuel producers that certify their CI score in the same form and manner as the certification of life cycle GHG emissions rates required for SAF. The proposed regulations provide a model certification for taxpayers to rely on for both the certification of SAF and the substantiation safe harbor for non-SAF transportation fuel.

Can Transportation Fuel Still Have a Negative Emissions Rate?

The OBBB amended Section 45Z to clarify that for transportation fuel produced after December 31, 2025, the emissions rate may not be less than zero (i.e., no negative emissions rates). The proposed regulations also clarify that the limitation regarding negative emissions rates also applies to any transportation fuel used as a production input. This prohibition on negative emissions rates does not apply to any transportation fuel derived from animal manure feedstocks.

Do I Still Need to Account for Indirect Land Use Changes in My CI Score?

The OBBB amended Section 45Z to exclude any emissions attributed to indirect land use changes for purposes of calculating the emissions rate for transportation fuel. The proposed regulations anticipate that taxpayers who use certain agricultural practices may benefit and account for these practices in future versions of the 45ZCF-GREET model.

Qualified Sales

What Sales Qualify for the Credit?

The proposed regulations generally define "qualifying sales" in accordance with the statutory definition of "sale" under Section 45Z(a)(4) that, as a threshold matter, requires that the transportation fuel be sold by the taxpayer to an unrelated person.

The guidance also clarifies that "trade or business" in the term "sold for use in a trade or business" has the same meaning as in Section 162. The term "sold for use in a trade or business" does not include a sale for blending or a sale to a purchaser that sells the fuel at retail to another person and places the fuel in the tank of such other person.

Can a Taxpayer Sell Fuel to a Reseller or an Intermediary and Consider Such Sale a "Qualified Sale"?

The proposed regulations clarify that the term "sold for use in a trade or business" includes fuel sold to an unrelated person that subsequently resells the fuel in its trade or business. The proposed regulations provide the following example illustrating these rules:

• X produces RNG that qualifies as a transportation fuel and sells the RNG to Y, an unrelated intermediary wholesaler and distributor.
• X injects the RNG into a pipeline for resale and distribution by Y.
• Y's business consists of purchasing RNG from different producers, distributing it through a pipeline, and reselling it to customers who may be dealers, distributors, retailers or end users of fuel.
• Y subsequently resells X's RNG as part of Y's business.
• X has made a qualified sale because X sold the RNG for use in Y's trade or business.

What Is the Substantiation Safe Harbor Related to Sales of Fuel?

A taxpayer may substantiate a qualified sale of transportation fuel by obtaining from the purchaser a certificate in substantially the same form as provided in the proposed regulations.

If the certificate relates to a single purchase, the taxpayer must obtain the certificate from the purchaser prior to or at the time of sale. If the certificate relates to purchases made over a period of time, the taxpayer must obtain the certificate from the purchaser prior to or at the same time as the first of the sales to which the certificate relates.

Can a Taxpayer Still Get a Credit if It Sold Fuel to a Related Person?

Yes. In the case of a corporation that is a member of an affiliated group of corporations filing a consolidated return (i.e., a member of an affiliated group), that corporation will be treated as selling fuel to an unrelated person if that fuel is sold to the unrelated person by another member of that consolidated group. The date of the sale is treated as the date on which the sale to an unrelated person is made.

The proposed regulations provide the following example to illustrate this rule:

• X, a fuel producer, and Y, an intermediary dealer, are members of an affiliated group of corporations filing a consolidated return.
• X produces transportation fuel and sells the fuel to Y.
• Y resells the fuel to Z, an unrelated person.
• Z then sells the fuel at retail to a customer and places the fuel in the customer's fuel tank.
• X is treated as selling the fuel to Z, and X has made a qualified sale of the fuel to Z.

Recordkeeping

Are There Any Recordkeeping and Substantiation Requirements?

A taxpayer claiming the Section 45Z PTC must maintain records sufficient to establish the taxpayer's eligibility for Section 45Z credit and the amount of the credit claimed on the return. At a minimum, those records must include records:

• establishing that each fuel produced is a transportation fuel
• establishing any relevant information relating to the primary feedstock(s) used to produce each such fuel
• establishing that each fuel meets any additional specifications for the type of fuel described in Section 1.45Z 1(b)(24) or (30)
• substantiating how the emissions rate for each fuel was determined (including, if applicable, the specific type(s) and category(ies) under the applicable emissions rate table)
• relating to any fuel testing obtained by the taxpayer
• establishing that each facility used to produce fuel is a qualified facility
• establishing the date each facility was placed in service
• establishing that each fuel was sold in a qualified sale
• establishing any certification from an unrelated person and substantiating the information therein
• used for or related to any petition for a provisional emissions rate (PER), including raw data

Importantly, as noted above, the proposed regulations provide two separate safe harbors for substantiation purposes: one for substantiation of the emissions rate of non-SAF transportation fuel, and another for substantiating that the transportation fuel was sold in a qualifying manner.

What About Recordkeeping Requirements for SAF?

For each taxable year for which a taxpayer claims the credit for SAF transportation fuel, the taxpayer must obtain certification from an unrelated person and include such certification with the taxpayer's tax return for each qualified facility at which the taxpayer produces SAF transportation fuel. The certification must be prepared by a qualified certifier, which generally includes those accredited by the California Air Resources Board's (CARB) Low Carbon Fuel Standard (LCFS) program, American National Standards Institute (ANSI) National Accreditation Board, International Sustainability and Carbon Certification (ISCC), Roundtable on Sustainable Biomaterials (RSB), ClassNK and other similar bodies.

Credit Calculation

Once I Calculate My Credit Rate, Are There Any Adjustments I Need to Make?

If the credit amount is not a multiple of one cent, it must be rounded to the nearest cent. Additionally, an amount ending in 0.5 cents or more must be rounded up and any amount ending in less than 0.5 cents must be rounded down.

How Do I Adjust My Credit Rate for Inflation?

For calendar years beginning after 2024, the applicable amount for any transportation fuel is adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale of the transportation fuel occurs. (Thereafter, the general rounding rule above applies.) The inflation adjustment factor is published annually in the Internal Revenue Bulletin.

What Is the Credit Rate for SAF?

Reflecting the amendment made by OBBB to Section 45Z, the proposed regulations specify that the credit rate for all transportation fuel, including SAF transportation fuel, produced after December 31, 2025, is $1. However, given the ability to have a negative emissions rate for animal manure derived fuel, such fuel may be eligible for a larger credit amount.

Proposed Regulations Under Section 4101

Who Must Register?

Every person intending to claim a Section 45Z credit with respect to the production of a fuel eligible for such credit is required to register with the IRS.

Consistent with Notice 2024-49, each business unit that has or is required to have a separate employer identification number (EIN) is treated as a separate person for registration purposes (including, e.g., each disregarded entity or qualified Subchapter S subsidiary (as defined in Section 1361(b)(3)(B)) that has an EIN and is a producer of transportation fuel for purposes of Section 45Z).

How Does a Person Apply to Be Registered as a Producer of Transportation Fuel for Purposes of Section 45Z?

The proposed regulations provide rules regarding the approval, denial, revocation or suspension of the registration under Section 4101 consistent with Notice 2024-49. Application for registration under Section 4101 must be made on Form 637.

What Are the Requirements for Registration Under Section 4101?

Consistent with the long-standing guidance under Section 4101, Prop. Treas. Reg. Section 1.4101-1 provides that the applicant meets the following three tests to pass registration:

• The Activity Test. Applicant is either, in the course of its trade or business, 1) regularly engaged in the activity for which it is requesting registration or 2) is likely to be (because of such factors as the applicant's business experience, financial standing or trade connections), in the course of its trade or business, regularly engaged in the activity for which it is requesting registration within 6 months after becoming registered under Section 4101.
• The Acceptable Risk Test. Neither the applicant nor a related person (as defined in paragraph (b)(4) of this section) has been penalized for a wrongful act.
• The Satisfactory Tax History Test. The filing, deposit and payment history for all federal taxes of the applicant and any related person supports the conclusion that the applicant will comply with its obligations under Section 4101.

What Is the Difference Between an Applicant and a Registration?

An "applicant" is a person who has applied for registration under Section 4101, whereas a "registrant" is a person who the IRS has registered as a producer of clean transportation fuel under Section 4101 and whose registration has not been revoked or suspended.

What Is the Reregistration Safe Harbor?

Consistent with prior guidance, the proposed regulations provide a safe harbor for a registrant that must reregister due to a change in ownership. If a registrant is approved for reregistration, such registrant would be eligible to claim a Section 45Z credit as of the date the IRS received the application for reregistration, even if, at the time of such registrant's fuel production, the IRS had not yet approved the reregistration.

Other Updates

What Other Changes to Existing Regulations Do the Proposed Regulations Make?

In connection with the issuance of proposed regulations under Section 45Z and Section 4101, the Treasury Department and IRS also issued conforming proposed regulations under Section 1361, Section 6417 and Section 6418. These conforming changes are intended to align the S-corporation eligibility rules and the elective payment and credit transfer frameworks with the operational mechanics of the Section 45Z clean fuel production credit. In particular, the conforming proposed regulations clarify how producer registration, taxpayer identity, facility attribution and credit ownership are determined for Section 45Z purposes, including in structures involving S-corporations.

What Comes Next?

How Can Interested Persons Comment on the Proposed Regulations?

Comments must be received by the Treasury Department and IRS by April 6, 2026. A public hearing will be held on May 28, 2026, at 10 a.m. ET. Requests to speak and outlines of topics to be discussed at the public hearing must be received by the Treasury Department and IRS by April 6, 2026. Requests to attend the public hearing must be received by May 26, 2026, at 5 p.m. ET.

When Will Final Regulations Be Issued?

There is no deadline for issuance of final regulations and, accordingly, the date for such issuance is unknown and may depend on the number of complexity of comments received by the Treasury Department and IRS.

If you have any questions, please contact a member of Holland & Knight's Renewable and Alternative Energy Tax Team. To receive additional analysis from the team, please subscribe to our alerts and access the Holland & Knight Energy Tax Resource Library.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.