Biodiesel Tax Credit Extended to Mid-2026: What It Means for Fuel Costs and Producers

The aptly named Consumer Relief and Opportunities for Producers Act, or CROP Act, is primarily focused on giving the biodiesel industry a significant financial boost by extending a key tax break.

The Short-Term Lifeline for Biodiesel

This bill temporarily extends the federal tax credit for biodiesel fuels from its current expiration date of December 31, 2024, all the way to May 31, 2026 (SEC. 2). For the producers and blenders who make and mix this fuel, that's a huge shot of certainty. When a tax credit is set to expire, companies often pull back on investments and planning. This 17-month extension gives them a solid runway to keep producing, which generally helps keep alternative fuel supplies stable. This stability is good news for anyone who uses diesel, as a healthy biodiesel market can help buffer against price spikes in traditional petroleum diesel.

No Double-Dipping Allowed

One of the most important technical aspects of the CROP Act is making sure companies don't claim two different tax breaks for the exact same fuel. The bill explicitly prevents a taxpayer from claiming both the existing biodiesel credit (Internal Revenue Code Section 40A) and the newer clean fuel production credit (Section 45Z) for the same fuel (SEC. 2). Think of it like this: you can't use two different coupons for the same item at the grocery store. This provision is designed to clarify the tax code and prevent “double-dipping” into federal subsidies. It’s a clean-up measure that ensures the government isn't paying twice for the same gallon of fuel production.

There is one exception, however: certain renewable diesel defined under Section 40A(b)(4)(D) can still qualify for both. This carve-out recognizes that some advanced renewable diesel processes meet the requirements for both incentives, but for the majority of standard biodiesel production, it’s one or the other.

Why This Matters to Your Wallet

If you’re not a fuel producer, you might be wondering why you should care about tax code sections. Here’s the connection: subsidies like this tax credit are designed to lower the cost of production for biodiesel. When production costs are lower, the fuel is more competitive with traditional diesel. This can mean more availability of biodiesel blends (like B20) and potentially more stable, or even lower, prices at the pump for truckers, farmers, and delivery services. For the average person, this translates into slightly lower costs for everything delivered by truck—from groceries to packages.

On the flip side, extending any tax credit means the government is spending money (or foregoing revenue) to support the industry. While beneficial for the environment and the industry, the cost of this continued subsidy is borne by the general taxpayer. The bill also includes technical updates to related fuel excise tax provisions (Sections 6426(c)(6) and 6427(e)(6)(B)), simply updating their expiration dates to match the new May 31, 2026, deadline, keeping the entire tax system aligned.