Virginia fuel producers could claim credits for qualifying jet fuel

Eligible producers may claim a state income tax credit for qualifying sustainable aviation fuel they produce. A producer must make or blend the fuel in Virginia using feedstock or biomass, at least 10 percent of which is grown or produced in Virginia. The fuel must meet specified standards, avoid certain waste-derived sources, and cut lifecycle greenhouse gas emissions by at least 50 percent compared with petroleum-based jet fuel. The credit cannot exceed the producer’s income tax for the year. Unused credit may carry forward for up to five following tax years. The credit is the lesser of 75 cents per gallon or $5 million per producer, and all credits are capped at $20 million per year. The state allocates them in application order. The credit applies to tax years beginning on or after January 1, 2027, and before January 1, 2032.

The Tax Commissioner must develop guidelines for claiming the credit. The guidelines cover claims for the sustainable aviation fuel production credit described in the substitute. The guidelines are exempt from Virginia’s Administrative Process Act.