IRS Form 8864 – In the realm of tax incentives for sustainable energy, IRS Form 8864 plays a crucial role for businesses involved in alternative fuels. This form allows eligible taxpayers to claim credits for biodiesel, renewable diesel, and sustainable aviation fuels (SAF), helping to offset costs and promote environmentally friendly fuel production. Whether you’re a producer, mixer, or seller of these fuels, understanding Form 8864 can lead to significant tax savings. In this SEO-optimized article, we’ll break down everything you need to know about IRS Form 8864, including eligibility, calculation methods, filing requirements, and recent updates as of 2026.
What Is IRS Form 8864?
IRS Form 8864, titled “Biodiesel, Renewable Diesel, or Sustainable Aviation Fuels Credit,” is used to claim tax credits under Internal Revenue Code sections 40A and 40B. Section 40A covers credits for biodiesel and renewable diesel fuels, while section 40B addresses the sustainable aviation fuel credit. The form enables taxpayers to report and claim these nonrefundable general business credits for the tax year in which the qualifying sale or use occurs.
The credits incentivize the production and use of cleaner fuels derived from biomass. For instance, the biodiesel credit applies to pure biodiesel (B100) or mixtures, while renewable diesel must meet specific standards like ASTM D975 or D396. The sustainable aviation fuel credit, available for fuels produced after 2022, offers additional incentives for aviation-specific blends.
Key components of the section 40A credit include:
- Biodiesel credit
- Renewable diesel credit
- Biodiesel mixture credit
- Renewable diesel mixture credit
- Small agri-biodiesel producer credit
These credits were primarily available through December 31, 2024, with the form’s latest revision (December 2025) allowing for reporting in transitional cases, such as credits from fiscal-year partnerships.
Who Is Eligible to File IRS Form 8864?
Eligibility for Form 8864 depends on your role in the fuel supply chain and the type of credit claimed. Generally, claimants must be U.S.-based producers, mixers, or users who meet strict IRS and EPA requirements.
Biodiesel and Renewable Diesel Credits
- Producers and Sellers: You qualify if you produce biodiesel or renewable diesel from qualifying biomass feedstocks and sell or use it in your trade or business. For retail sales, only the seller who places the fuel into a vehicle’s tank is eligible.
- Mixtures: Claimants who produce mixtures by blending biodiesel or renewable diesel with other fuels can claim the mixture credit.
- Small Agri-Biodiesel Producers: Eligible if you produce up to 15 million gallons of agri-biodiesel annually and meet registration requirements.
- Requirements: Fuels must be registered with the EPA, meet ASTM standards (e.g., D6751 for biodiesel), and exclude co-processed fuels from non-biomass feedstocks. A certificate from the registered producer or importer is required, detailing the fuel’s content and compliance.
Sustainable Aviation Fuels Credit
- Available for SAF produced after 2022, this credit targets mixtures suitable for aviation. Producers must be IRS-registered and provide certificates to buyers.
- Recent safe harbors were introduced in February 2024 to simplify compliance for SAF credits.
Partnerships, S corporations, cooperatives, estates, and trusts must file Form 8864 to claim these credits. Other taxpayers receiving credits from pass-through entities can report them directly on Form 3800, General Business Credit.
How to Calculate the Credits on Form 8864?
The credits are volumetric, based on gallons produced, sold, or used. Here’s a breakdown of the rates (applicable through 2024):
| Credit Type | Rate per Gallon |
|---|---|
| Biodiesel Credit | $1.00 |
| Renewable Diesel Credit | $1.00 |
| Biodiesel Mixture Credit | $1.00 |
| Renewable Diesel Mixture Credit | $1.00 |
| Small Agri-Biodiesel Producer Credit | $0.10 |
| Sustainable Aviation Fuel Credit | $1.25 (base) + supplementary amounts based on emissions reductions |
To calculate:
- Determine the number of qualifying gallons.
- Multiply by the applicable rate.
- For SAF, add any supplementary credits for lower emissions.
Claims require supporting documentation, such as producer certificates and proof of EPA registration. These credits are nonrefundable but can be carried forward if they exceed your tax liability.
Step-by-Step Guide to Filing IRS Form 8864
- Gather Documentation: Collect producer certificates, sales records, and registration proofs.
- Complete the Form: Use the latest revision (Rev. December 2025 for 2025 filings). Report gallons and calculate credits on the appropriate lines.
- Attach to Your Return: File with your income tax return (e.g., Form 1040, 1120, or 1065).
- Report on Form 3800: Transfer the total credit to Form 3800 for general business credits.
- Consider Excise Tax Options: Alternatively, claim as excise tax credits on Form 720, 8849, or 4136 for faster refunds.
For detailed line-by-line instructions, refer to the official IRS Instructions for Form 8864 (Rev. December 2025).
Recent Updates and Transitions for 2025 and Beyond
The biodiesel and renewable diesel credits under section 40A were extended through December 31, 2024, via the Inflation Reduction Act (Public Law 117-169). Starting January 1, 2025, these incentives are largely replaced by the Clean Fuel Production Credit (section 45Z), a technology-neutral credit for low-emission transportation fuels.
- Clean Fuel Production Credit Details: Claimed on new Form 7218, with rates ranging from $0.20 to $1.75 per gallon (adjusted for inflation and prevailing wage/apprenticeship requirements). Producers must register with IRS Form 637 under activity letters “CN” (non-SAF) or “CA” (SAF).
- Why Form 8864 Still Matters in 2026: Use it to report legacy credits from fiscal-year entities or carryovers. For new production in 2025+, switch to Form 7218.
Stay updated via IRS Publication 510, Excise Taxes.
Related Forms and Publications
- Form 637: For IRS registration as a producer.
- Form 3800: To aggregate general business credits.
- Form 720/8849/4136: For excise tax claims.
- Publication 510: Detailed guidance on fuel tax credits.
Frequently Asked Questions About IRS Form 8864
What is the deadline for filing Form 8864?
File with your tax return for the year the credit is claimed. Extensions apply if your return is extended.
Can individuals claim this credit?
Yes, if involved in qualifying fuel activities, but often it’s for businesses.
What if my credit exceeds my tax liability?
Carry forward the excess to future years.
How does the transition to section 45Z affect me?
For post-2024 production, use Form 7218 instead.
Conclusion
IRS Form 8864 remains an essential tool for claiming tax credits on biodiesel, renewable diesel, and sustainable aviation fuels, even as the landscape shifts toward the Clean Fuel Production Credit in 2025. By meeting eligibility requirements and properly documenting your claims, you can maximize these incentives. Always consult a tax professional for personalized advice, and check the IRS website for the latest forms and instructions. For the official PDF, download it from the IRS site.