Restoring Fuel Market Freedom Act of 2025
The Restoring Fuel Market Freedom Act of 2025 would repeal several federal tax credits that support the production and use of alternative and low-emission fuels. Specifically, it would eliminate the alcohol fuels credit, the biodiesel fuel credit, the sustainable aviation fuel credit, the clean fuel production credit, and the alcohol fuel/biodiesel/alternative fuel mixtures credit, along with related provisions and payments for fuels not used for taxable purposes. The bill includes conforming amendments to the Internal Revenue Code to remove these credits and to adjust cross-references so the code reflects their repeal. Importantly, the amendments are generally prospective, applying to fuels produced, sold, or used after the date of enactment, with transitional language intended to preserve certain pre-enactment references. In short, the bill moves the United States away from subsidizing biofuels and related clean fuel programs via tax credits, aiming to rely more on market forces rather than federal subsidies for these fuels.
Key Points
- 1Repeals the main federal tax credits for fuels, including:
- 2- Alcohol fuels credit (section 40)
- 3- Biodiesel fuel credit (section 40A)
- 4- Sustainable aviation fuel credit (section 40B)
- 5- Clean fuel production credit (section 45Z)
- 6- Alcohol fuel, biodiesel, and alternative fuel mixtures credit (section 6426)
- 7- Also repeals related payments for fuels not used for taxable purposes (section 6427)
- 8Conforming amendments and transitional language:
- 9- Inserts references like “as in effect on the day before the date of the enactment of the Restoring Fuel Market Freedom Act of 2025” after mentions of the repealed sections to preserve pre-enactment rules where applicable.
- 10- Makes a number of cross-reference updates across the code (e.g., sections 25C, 38, 87, 196, 4101, 4104, 6426, 7704) to reflect the repeal and maintain internal consistency.
- 11Effective date and scope:
- 12- The amendments generally apply to fuels produced after enactment.
- 13- Repeals apply to fuels sold, used, or produced after the enactment date, with some sections specifying “after the date of enactment.”
- 14No new credits introduced:
- 15- The bill removes existing subsidies and does not replace them with new tax incentives or credits.
- 16Sponsor and process:
- 17- Introduced in the House on January 9, 2025, by Rep. Perry (joined by Reps. Ogles and Burlison) and referred to the Ways and Means Committee.