The "Restoring Fuel Market Freedom Act of 2025" repeals various tax credits and related provisions for alcohol fuels, biodiesel, sustainable aviation fuel, clean fuel production, and alternative fuel mixtures to eliminate government subsidies in the fuel market. These changes aim to remove specific sections from the tax code and related references to these credits, effective for fuels produced or used after the bill's enactment.
Scott Perry
Representative
PA-10
The "Restoring Fuel Market Freedom Act of 2025" repeals various tax credits and provisions related to alcohol fuels, biodiesel, sustainable aviation fuel, clean fuel production, and alternative fuel mixtures. This includes repealing sections 40, 40A, 40B, 45Z, and 6426 of the Internal Revenue Code, along with making corresponding technical amendments. The changes aim to eliminate tax incentives for these fuels, with all repeals being effective for fuels produced, sold, or used after the enactment date of the Act. Additionally, it repeals section 6427(e) and makes conforming amendments.
Restoring Fuel Market Freedom Act of 2025: Axing Alternative Fuel Tax Credits
The "Restoring Fuel Market Freedom Act of 2025" is all about wiping out tax breaks for alternative fuels. This bill, if passed, would eliminate credits for everything from alcohol fuels and biodiesel to sustainable aviation fuel (SAF) and clean fuel production. Basically, it's a sweep of sections 40, 40A, 40B, 45Z, 6426, and 6427(e) of the tax code that currently give these fuels a financial leg up. The goal? According to the bill, it's to restore 'freedom' to the fuel market.
Killing the Credits
The core of this bill is the repeal of several tax credits that make alternative fuels more financially viable. For example, the alcohol fuels credit (section 40) is gone. This means that producers of fuels like ethanol will no longer get a tax break for blending alcohol with gasoline. Similarly, the biodiesel credit (section 40A) is eliminated, impacting producers who make fuel from sources like vegetable oils or animal fats. The sustainable aviation fuel (SAF) credit (section 40B), designed to encourage airlines to use cleaner fuels, is also axed. These changes take effect for fuels produced, sold, or used after the bill is enacted, depending on the specific credit.
Real-World Rollback
Let's say you're a farmer who's been supplying corn for ethanol production, partly because the tax credits made it profitable. This bill could pull the rug out from under that business model. Or consider an airline that's been investing in SAF to reduce its carbon footprint – the removal of the SAF credit (section 40B) makes that investment significantly more expensive. The same goes for companies developing "clean fuels," as Section 45Z, the clean fuel production credit, is completely removed from the tax code. It essentially levels the playing field, but by making it harder for cleaner fuels to compete, not by making it easier.
The Bigger Picture
This bill essentially resets the clock on government support for alternative fuels. While proponents might argue it simplifies the tax code, the practical effect is a potential chilling effect on the development and adoption of cleaner energy sources. It removes a key financial incentive for companies to invest in these technologies, and could lead to higher prices for consumers who choose alternative fuels. It also directly contradicts efforts to lower carbon emissions, as these tax credits were, in part, designed to encourage a shift away from fossil fuels. The bill fits within a larger context of existing laws like the Internal Revenue Code of 1986, but it actively removes sections designed to promote greener alternatives.