CLEAR Skies Act Offers $1.25/Gallon Tax Credit to Phase Out Leaded Aviation Fuel by 2030

The newly proposed CLEAR Skies Act aims to clean up the air around airports by offering a hefty tax credit to companies that produce lead-free aviation gasoline. Starting in 2026, producers of this “qualified aviation gasoline” can claim a tax credit that starts at $1.25 per gallon, dropping slightly each year until the credit expires after December 31, 2030.

This is a straight-up economic incentive designed to push the industry away from leaded fuel, which is still used in many smaller aircraft and poses environmental concerns. To qualify, the fuel has to be made in the U.S., meet specific FAA standards, and—most importantly—contain zero tetra-ethyl-lead. For the busy person, this bill is about whether the government is willing to spend taxpayer money to speed up an environmental cleanup, and whether those savings actually make it to consumers.

The Lead-Free Fuel Subsidy: What’s the Catch?

The core of this bill (SEC. 2) is the new tax credit, which is added to the general business credits list. Think of it as the government paying fuel refiners to change their recipe. The credit starts strong at $1.25 per gallon in 2026, but it decreases annually, hitting $1.05 per gallon by 2030. This setup gives manufacturers a five-year window to transition their production lines and capture this subsidy. If you’re a taxpayer, this is where your dollars are going—to incentivize a massive shift in fuel production.

For this to work, the producers have to jump through a few hoops: they must register with the IRS and provide proof that their fuel meets all the strict standards for being lead-free and FAA-approved. This requirement is meant to ensure we don’t just get cheap, unregulated fuel, but a fully compliant, safe product. If you’re running a small fuel company, meeting these new registration and compliance requirements could be a significant administrative lift.

Who Actually Gets the Savings? The GAO Steps In

Here’s the part that shows the bill’s drafters know how subsidies sometimes work (or don't): they included a mandatory check-up. Section 3 requires the Government Accountability Office (GAO) to launch a comprehensive study on unleaded aviation gas prices. The GAO has one year to figure out the price difference between leaded and unleaded gas and, crucially, determine if the new tax credit is actually resulting in lower costs for the end-user—the people buying the gas for their planes.

If the GAO finds that the savings aren’t fully “reaching the end-user,” they are required to suggest changes to the tax credit to ensure consumers get the biggest possible savings. This is a vital check on corporate behavior. It’s the government basically saying, “We’re giving you $1.25 a gallon, but if you pocket it all, we’ll change the rules.” However, the bill doesn’t define how much of the savings must be passed down, leaving a bit of wiggle room for interpretation and potential debate.

Real-World Impact: Cost vs. Clean Air

This bill sets up a clear trade-off. On one hand, it’s a strong push toward cleaner air, especially important for communities near airports that deal with lead pollution. On the other hand, it’s a new, multi-year tax expense for taxpayers. The success of the CLEAR Skies Act hinges entirely on whether the fuel producers use the subsidy to genuinely lower the price of the new, cleaner fuel, or if they just use it to boost their margins. The mandated GAO study is the mechanism designed to hold their feet to the fire, but we’ll have to wait and see if the definition of “fully reaching the end-user” is strict enough to matter.