Instructions 7218 Instructions for Form 7218, Clean Fuel Production Credit

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Instructions for Form 7218

Department of the Treasury
Internal Revenue Service

(December 2024)

Clean Fuel Production Credit
Amount of Credit

Section references are to the Internal Revenue Code
unless otherwise noted.

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General Instructions
Future Developments

For the latest information about developments related to
Form 7218 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form7218.

What’s New

New Form 7218. Beginning in 2025, new Form 7218,
Clean Fuel Production Credit, will be used to claim the
section 45Z clean fuel production credit.

Tax-exempt and governmental entities. Applicable
entities (such as certain tax-exempt and governmental
entities) can elect to treat the clean fuel production credit
as a payment of income tax. See Applicable entities, later.
Credit transfers. Eligible taxpayers, partnerships, and S
corporations can elect to transfer all or part of the credit
amount otherwise allowed as a general business credit to
an unrelated third-party buyer in exchange for cash.
Eligible taxpayers don't include applicable entities and
electing taxpayers. See Credit transfers, later.

Pre-filing registration. The IRS has established a
pre-filing registration that must be completed prior to
electing payment or transfer of the clean fuel production
credit. See Pre-filing registration requirement for payments
or transfers, later.

Purpose of Form

Use Form 7218 to claim the section 45Z credit for the
production of qualified clean fuel produced and sold after
2024.

How To Claim the Credit

To qualify for the credit, the clean fuel must be
transportation fuel produced in the United States
(including U.S. territories) by the taxpayer at a qualified
facility after 2024, and sold by the taxpayer to an unrelated
person for a use described in section 45Z(a)(4) during the
tax year. The taxpayer must be registered as a producer of
clean fuel under section 4101 at the time of production to
claim the credit. For more information about section 45Z(f)
registration requirements, see Notice 2024-49, available
at IRS.gov/irb/2024-26_IRB#NOT-2024-49.
File a separate Form 7218 for each qualified facility for
which you claim the section 45Z credit. Complete Part I to
report facility information and the appropriate lines of Parts
II and III, as needed, to calculate your clean fuel
production credit for such facility.

Oct 22, 2024

The clean fuel production credit for any tax year is
adjusted annually for inflation. The credit is calculated by
multiplying the applicable amount by each gallon (or
gallon equivalent) of fuel produced and sold by the
emissions factor of the fuel.
The applicable amount ranges from $0.20 to $1.75 per
gallon depending on whether the fuel is sustainable
aviation fuel (SAF) or non-SAF, and if prevailing wage and
apprenticeship (PWA) requirements are met.

Applicable Amount

Base Amount Table

Type of fuel

Base amount

Non-SAF and PWA requirements are not met

$0.20

Non-SAF and PWA requirements are met

$1.00

SAF and PWA requirements are not met

$0.35

SAF and PWA requirements are met

$1.75

The applicable amount is adjusted by multiplying the
base amount by the inflation adjustment factor for the
calendar year in which the sale of the transportation fuel
occurs. When released, the inflation adjustment factor for
2025 will be available on IRS.gov. If this adjusted amount
is not a multiple of 1 cent, the amount must be rounded to
the nearest multiple of 1 cent.

Emissions Factor

The emissions factor is calculated by subtracting the
emissions rate or provisional emissions rate (PER) value
(in kilograms of CO2e per mmBTU) of the fuel from 50
kilograms of CO2e per mmBTU and dividing the result by
50 kilograms of CO2e per mmBTU.
The Treasury Department and the IRS will annually
publish a table that sets forth the emissions rate for similar
types and categories of transportation fuels based on the
amount of lifecycle greenhouse gas emissions as
described in section 211(o)(1)(H) of the Clean Air Act
(CAA) (42 U.S.C. 7545(o)(1)(H)), as in effect on August
16, 2022 (emissions rate table).
PER value. In the case of any transportation fuel for
which an emissions rate has not been determined, a
taxpayer producing such fuel may file a petition with the
Secretary of the Treasury to determine the emissions rate
with respect to such fuel known as a PER value.
Applicable entities. Applicable entities (as defined
under section 6417(d)(1)(A)) that generally don't benefit
from income tax credits may elect to treat the clean fuel
production credit as a payment of income tax. Resulting
overpayments may result in refunds.

Cat. No. 94870K

Applicable entities making the elective payment
election for the clean fuel production credit must file the
following.
• Form 7218.
• Form 3800, General Business Credit.
• Form 990-T, Exempt Organization Business Income Tax
Return, or other applicable income tax return.
For a discussion of what is considered an applicable
entity, see Applicable entity making an EPE on IRA 2022
credits in the Instructions for Form 3800. For more
information on elective payment elections under section
6417, see Elective Payment of Certain Business Credits
Under Section 6417 or Section 48D in the Instructions for
Form 3800.

• Under the labor hours requirement, the taxpayer must
ensure that, depending on when construction began, 10%
to 15% of the total labor hours performed in the
construction, alteration, or repair of the qualified facility
are performed by qualified apprentices from a registered
apprenticeship program.
• Under the ratio requirement, the taxpayer must ensure
that the applicable ratio of apprentices to journey-workers
established by the registered apprenticeship program is
met for apprentices working on the qualified facility each
day.
• Under the participation requirement, any taxpayer (or
contractor or subcontractor) that employs four or more
laborers or mechanics in the construction, alteration, or
repair of the qualified facility must also hire at least one
qualified apprentice.

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Credit transfers. Under section 6418, eligible taxpayers
can elect to transfer all or part of the clean fuel production
credit amount otherwise allowed as a general business
credit to an unrelated third party in exchange for cash.
Eligible taxpayers don't include applicable entities. For
more information on credit transfers, see Transfer of
Eligible Credits Under Section 6418 in the Instructions for
Form 3800.

Pre-filing registration requirement for payments or
transfers. Before you file your tax return, if you intend to
make an elective payment election or transfer election on
Form 3800 for the clean fuel production credit, you must
complete a pre-filing registration for each qualified facility.
To register, go to IRS.gov/credits-deductions/register-forelective-payment-or-transfer-of-credits. See Pub. 5884,
Inflation Reduction Act (IRA) and CHIPS Act of 2022
(CHIPS) Pre-Filing Registration Tool, for more information.
Also see Registering for and Making EPEs and Transfer
Elections in the Instructions for Form 3800.

Prevailing Wage Requirements

To meet the prevailing wage requirements with respect to
any qualified facility, a taxpayer must ensure that any
laborers and mechanics employed by the taxpayer or any
contractor or subcontractor in:
• The construction of such facility, and
• The alteration or repair of such facility (with respect to
any tax year, for any portion of such tax year that is within
the 10-year period beginning on the date the facility is
originally placed in service) are paid wages at rates not
less than the prevailing rates for construction, alteration, or
repair of a similar character in the locality in which such
facility is located. Correction and penalty mechanisms for
a taxpayer's failure to satisfy the prevailing wage
requirements are set forth under section 45(b)(7)(B).
For qualified facilities placed in service before 2025, the
taxpayer is not subject to the prevailing wage
requirements with respect to the construction of the facility
but is subject to the prevailing wage requirements for the
alteration or repair of the facility with respect to any tax
year beginning after 2024, for which the section 45Z credit
is allowed.

Apprenticeship Requirements

The apprenticeship requirements of IRA 2022 include
three components: a labor hours requirement, a ratio
requirement, and a participation requirement.
2

Special transition rule for qualified facilities placed in
service before 2025. The taxpayer is not subject to the
apprenticeship requirements with respect to construction
of a facility that occurs on or before 90 days after June 25,
2024.
For further information on the PWA requirements, go to
IRS.gov/credits-deductions/frequently-asked-questionsabout-the-prevailing-wage-and-apprenticeship-under-theinflation-reduction-act.

Definitions
Applicable Material

Applicable materials are:
• Monoglycerides, diglycerides, and triglycerides;
• Free fatty acids; and
• Fatty acid esters.

Biomass
Biomass is any organic material other than oil, natural gas,
and coal (including ignite), or any product thereof.

CO2e
The term “CO2e” with respect to any greenhouse gas is
the equivalent carbon dioxide (as determined based on
relative global warming potential).

Greenhouse Gases
Greenhouse gases have the same meaning given to such
term under section 211(o)(1)(H) of the CAA.

mmBTU
The term “mmBTU” means 1,000,000 British thermal
units.

Qualified Facility
A qualified facility is a facility used for the production of
transportation fuels, and does not include any facility for
which one of the following credits is allowed under section
38 for the tax year.
Instructions for Form 7218 (2024)

• The credit for production of clean hydrogen under
section 45V.
• The credit determined under section 46 to the extent
that such credit is attributable to the energy credit
determined under section 48 with respect to any specified
clean hydrogen production facility for which an election is
made under section 48(a)(15). An election made under
section 48(a)(15) is an irrevocable election.
• The credit for carbon oxide sequestration under section
45Q.
Sale

Line 2a

Enter a description of the qualified facility where the
transportation fuel was produced.

Line 2b

If different from filer, enter owner's name and taxpayer
identification number (TIN).

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A sale for purposes of the section 45Z credit occurs when
the transportation fuel is sold by the taxpayer to an
unrelated person:
• For use by such person in the production of a fuel
mixture,
• For use by such person in a trade or business, or
• Who sells such fuel at retail to another person and
places such fuel in the fuel tank of such other person.

Sustainable Aviation Fuel (SAF)

SAF is the portion of liquid fuel that is not kerosene that is
sold for use in an aircraft and:
• Meets the requirements of either ASTM International
D7566, or the Fischer-Tropsch provisions of ASTM D1655
Annex A1; and
• Is not derived from palm fatty acid distillates or
petroleum.

SAF must also meet the transportation fuel
requirements of section 45Z(d)(5)(A). For more
information on the SAF requirements, see Notice 2024-49,
sections 2.03 and 3.04(1), available at IRS.gov/irb/
2024-26_IRB#NOT-2024-49.
To claim the clean fuel production credit for the
production and sale of SAF, unrelated party certification is
required under section 45Z(f)(1)(A)(i)(II)(aa).

Transportation Fuel
Transportation fuel is fuel which:
• Is suitable for use in a highway vehicle or aircraft,
• Has an emissions rate which is not greater than 50
kilograms of CO2e per mmBTU, and
• Is not derived from co-processing an applicable
material (or materials derived from an applicable material)
with a feedstock which is not biomass.
The term “transportation fuel” includes non-SAF
transportation fuel and SAF.

Specific Instructions
Part I—Facility and Other Information
Line 1

Lines 2c and 2d

Enter the address of the facility and the coordinates of the
facility.

Line 3

Enter the date construction began. This information is
needed to determine the credit amount based on PWA
requirements.

Line 4

Enter the date the qualified facility was originally placed in
service. This information is needed to determine the credit
amount based on PWA requirements.

Line 5a

Enter the producer registration number issued by the IRS.
See Notice 2024-49, section 4, available at IRS.gov/irb/
2024-26_IRB#NOT-2024-49, for the procedures to
register as a producer of clean fuel. Frequently asked
questions about applying for registration are available at
IRS.gov/newsroom/frequently-asked-questions-aboutapplying-for-registration-for-the-clean-fuel-productioncredit-under-ss-45z.
If the registration number does not fit on this line or you
have more than one registration number, please attach a
document with this information to your Form 7218.

Line 5b

Enter the date of your registration letter providing approval
for producers of transportation fuel with activity letter CN
(non-SAF) or CA (SAF). No clean fuel production credit
can be claimed for any transportation fuel unless the
taxpayer is registered as a producer of clean fuel under
section 4101 at the time of production. For example, if a
taxpayer receives a letter of registration dated June 30,
2025, the taxpayer cannot claim the section 45Z credit for
any transportation fuel produced and sold by the taxpayer
before June 30, 2025, even if all other section 45Z
requirements are met prior to that date. That taxpayer can
only claim the section 45Z credit for transportation fuel
produced and sold on or after June 30, 2025.

Line 6

Check the box if you are using a PER value to calculate
the clean fuel production credit. A taxpayer may file a
petition with the Secretary for determination of the
emissions rate for any transportation fuel for which an
emissions rate has not already been established. The
Treasury Department and the IRS will provide guidance
regarding the emissions rate table and PER petition
procedures at a later time.

If applicable, enter your pre-filing registration number
which you received from the IRS. See Pre-filing
registration requirement for payments or transfers, earlier.
Instructions for Form 7218 (2024)

3

Line 7

• Schedule K-1 (Form 1041), Beneficiary’s Share of
Income, Deductions, Credits, etc., box 13 (code L); and
• Form 1099-PATR, Taxable Distributions Received From
Cooperatives, box 12.

Additional information for increased credit amount. If
you checked “Yes” on line 7 and are using an increased
applicable amount on Part III, column (g), you must also
attach a statement to Form 7218 that includes the
following information to claim the increased credit amount
for the qualified facility.
1. Your name and TIN and the description (including
owner information, if different from filer) and location of the
facility and the IRS-issued registration number (if
applicable) from Part I.
2. The applicable wage determinations (as defined
below) for each classification of laborer and mechanic
who performed work on the construction, alteration, or
repair of the facility.
3. The wages paid (including any correction payments
as defined in section 45(b)(7)(B)(i)(I)) and hours worked
for each of the laborer or mechanic classifications
engaged in the construction, alteration, or repair of the
facility.
4. The number of laborers and mechanics who
received correction payments as the result of any failure to
pay the applicable prevailing wage rates.
5. The amount of penalty payments owed with respect
to any failures to pay the applicable prevailing wage rates.
6. The wages paid and hours worked by qualified
apprentices for each of the laborer or mechanic
classifications engaged in the construction of the facility.
7. The total labor hours for the construction of the
project by any laborer or mechanic employed by the
taxpayer or any contractor or subcontractor.
8. The amount of hours for which you claim to have
satisfied the apprenticeship requirements under the
good-faith effort exception.
9. The amount of penalty payments owed with respect
to any failure to meet the labor-hours requirement or the
participation requirement.

Partnerships and S corporations must enter the
passed-through credits on line 2. Also, estates and trusts
that can allocate the source credit to beneficiaries, and
cooperatives that can allocate the credit to patrons, must
enter the passed-through credits on line 2. Filers figuring
credits on earlier lines of Form 7218 must enter the
passed-through credits on line 2.

Check “Yes” if you satisfy the section 45Z(f)(6) and section
45Z(f)(7) PWA requirements. See Prevailing Wage
Requirements and Apprenticeship Requirements, earlier.

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Applicable wage determinations. Applicable wage
determinations are the wages listed for a particular
classification of laborer or mechanic for the type of
construction and the geographic area, or other applicable
wage as determined by the Secretary of Labor.

Part II—Clean Aviation and
Non-Aviation Transportation Fuel
Production Credit
Line 2

Enter the total clean fuel production credit amount from
your distributive share reported on:
• Schedule K-1 (Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., box 15 (code X);
• Schedule K-1 (Form 1120-S), Shareholder’s Share of
Income, Deductions, Credits, etc., box 13 (code X);

4

If you are not a filer described above, and your only
clean fuel production credit is a credit(s) passed through
to you, you can report the credit(s) directly on Form 3800,
Part III, line 1q.

Line 3

Partnerships and S corporations. If you are a
partnership or S corporation electing to transfer energy
credit with respect to a facility or property (or portion
thereof) under section 6418(c), you must report the total
credit amount with respect to your facility on Form 3800,
Part III, line 1q, and not on Schedule K.

Line 4

Cooperative election to allocate credit to patrons. A
cooperative described in section 1381(a) that is more than
50% owned by agricultural producers or by entities owned
by agricultural producers can elect to allocate any part of
the credit among the patrons of the cooperative. The
credit is allocated among the patrons eligible to share in
patronage dividends on the basis of the quantity or value
of business done with or for such patrons for the tax year.
If the cooperative is subject to the passive activity rules,
include on line 2 any clean energy production credit from
passive activities disallowed for prior years and carried
forward to this year. Complete Form 8810, Corporate
Passive Activity Loss and Credit Limitations, to determine
the allowed credits that can be allocated to patrons. For
details, see the Instructions for Form 8810.
The cooperative is deemed to have made the election
by completing line 4, as applicable. However, the election
isn't effective unless (a) made on a timely filed return
(including extensions), and (b) the organization
designates the apportionment in a written notice mailed to
its patrons during the payment period described in section
1382(d) or on Form 1099-PATR.
If you timely file your return without making an election,
you can still make the election by filing an amended return
within 6 months of the due date of the return (excluding
extensions). Enter “Filed pursuant to section 301.9100-2”
on the amended return.
Once made, the election can’t be revoked.

Estates and trusts. Allocate the credit on line 3 between
the estate or trust and the beneficiaries in the same
proportion as income was allocated and enter the
beneficiaries’ share on line 4.
If the estate or trust is subject to the passive activity
rules, include on line 2 any clean fuel production credit
from passive activities disallowed for prior years and
Instructions for Form 7218 (2024)

carried forward to this year. Complete Form 8582-CR,
Passive Activity Credit Limitations, to determine the
allowed credit that must be allocated between the estate
or trust and the beneficiaries. For details, see the
Instructions for Form 8582-CR.

Part III—Clean Aviation and
Non-Aviation Transportation Fuel
Produced and Sold After 2024

Column (e)

Subtract the emissions rate or PER value (in kilograms of
CO2e per mmBTU) from 50 kilograms of CO2e. Divide the
result by 50 kilograms of CO2e, and enter in column (e).
50 kg of CO2e − emissions rate or PER value (kg of CO2e)
50 kg of CO2e

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Column (a)

Column (f)

Column (b)

Enter the inflation-adjusted applicable amount for the fuel
sold. See the Applicable Amount Table, earlier, to
determine which amount to use.

Enter the type of fuel and if it is non-SAF or SAF. For more
information on types of fuel that may qualify as
transportation fuel, see section 3 of Notice 2024-49,
available at IRS.gov/irb/2024-26_IRB#NOT-2024-49.

Enter the type of feedstock used to produce the fuel. See
Appendix A of Notice 2024-49 for a list of feedstocks and
feedstock types associated with the varieties of fuel that
may qualify as transportation fuel.

Column (c)

Enter the four-digit calendar year when the fuel was sold.

Enter the number of gallons or gallon equivalents of fuel
sold in the calendar year.

Column (g)

Column (h)

For all lines with entries, multiply column (e) x column (f) x
column (g) and enter the product in the corresponding line
of column (h). On line 25, add all the column (h) amounts,
and enter on Part II, line 1.

Column (d)

Enter the emissions rate or PER value (in kilograms of
CO2e per mmBTU) of the fuel. See Emissions Factor,
earlier.

Instructions for Form 7218 (2024)

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Instructions for Form 7218 (2024)