New Tax Credit Offers $1.00 Per Gallon Equivalent for Renewable Natural Gas Used in Transport Through 2035

The Renewable Natural Gas Incentive Act of 2025 is aiming to put a serious financial incentive behind cleaner transportation fuels. Essentially, this bill creates a brand-new tax credit specifically for Renewable Natural Gas (RNG) used as fuel in vehicles, boats, or airplanes. If you sell or use RNG as fuel, you get a tax credit of $1.00 for every gallon equivalent (based on energy content) of that gas. The clock is ticking on this one, though: the credit is scheduled to end after December 31, 2035.

The $1.00 Fuel Discount

Think of this as a significant, direct subsidy for businesses that switch their fleets—or even their energy sources—to RNG. For a company running a fleet of delivery trucks or operating a municipal bus line, that $1.00 per gallon equivalent adds up fast, potentially making RNG cheaper than its fossil fuel counterparts. The bill defines RNG as gas derived from biomass, which covers things like landfill gas or gas captured from agricultural waste. To make sure the credit actually helps the businesses making the switch, the bill mandates that the Treasury Secretary must pay the credit amount directly to the business, effectively making it a refundable credit.

Keeping the Books Straight

This isn't a free-for-all, however. The legislation sets up some strict rules to prevent fraud and double-dipping. First, you have to be registered with the IRS to produce the gas. Second, if you’re blending RNG with conventional natural gas—say, at a fueling station—you can only claim the credit for the certified RNG portion. This requires having a contract with the RNG producer that specifies the volume and time period, and the producer has to provide certification. This is the bill’s way of ensuring that the incentive only applies to the renewable part of the fuel mix, not the whole tank. It also explicitly states you can’t claim this new credit if you’re already getting another federal benefit for that same fuel.

Real-World Impact and the Fine Print

For the average person, this bill won't directly lower the price at the pump immediately, but it could accelerate the adoption of cleaner commercial vehicles. If a local waste management company can save hundreds of thousands of dollars a year by converting its trucks to RNG, that could translate into stable service costs or investment in newer, quieter equipment. Conversely, while this credit helps the environment by incentivizing cleaner fuel, it's paid for by the general taxpayer. This is a new expenditure that will be funded through the federal budget, meaning the public bears the cost of this transition incentive. Also, the $1.00 credit only applies if the RNG is produced and used within the United States, keeping the focus squarely on domestic energy markets and jobs.