H.R.3137 - Biodiesel Tax Credit Extension Act of 2025 (119th Congress)
Summary
H.R.3137, the Biodiesel Tax Credit Extension Act of 2025, proposes to amend the Internal Revenue Code of 1986 to extend tax credits for biodiesel and renewable diesel fuels through 2026. It also includes provisions to prevent double benefits, ensuring that fuel eligible for the Clean Fuel Production Credit (Section 45Z(a)) does not also receive credits under sections 40A or 6426(c). The bill further coordinates the alcohol fuel credit with the clean fuel production credit and extends the alcohol fuel credit with respect to second-generation biofuel production through January 1, 2027.
Expected Effects
The extension of these tax credits aims to incentivize the production and use of biodiesel and renewable diesel fuels. This could lead to increased investment in the biofuel industry and a greater supply of these fuels in the market. The denial of double benefits ensures that the tax incentives are targeted and efficient.
Potential Benefits
- Supports renewable energy: Encourages the use of biofuels, potentially reducing reliance on fossil fuels.
- Economic stimulus: Could create jobs in the biofuel production and related industries.
- Reduces emissions: Biofuels may offer lower greenhouse gas emissions compared to traditional fuels.
- Supports agriculture: Creates a market for agricultural products used in biofuel production.
- Promotes energy independence: Diversifies the energy supply and reduces dependence on foreign oil.
Potential Disadvantages
- Potential for market distortion: Tax credits can artificially inflate demand and prices for biofuels.
- Uncertain environmental benefits: The actual greenhouse gas emissions reductions from biofuels can vary depending on production methods.
- Cost to taxpayers: The tax credits represent a cost to the federal government, potentially increasing the budget deficit.
- Possible unintended consequences: Increased biofuel production could lead to land use changes and other environmental impacts.
- Administrative complexity: Ensuring compliance with the credit requirements can be complex and costly.
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), which allows Congress to enact laws that promote the well-being of the nation. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts, and excises, which provides the constitutional basis for enacting tax credits such as those for biodiesel. The bill does not appear to infringe upon any specific individual rights or liberties protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).