The Internal Revenue Service (the “IRS” or “Service”) recently released detailed guidance concerning the classification and treatment of Prohibited Foreign Entities (“PFEs”) as well as the application of the related Foreign Entity of Concern (“FEOC”) restrictions that were created in the One Big Beautiful Bill Act (“OBBBA” or “Bill”).
Enacted by the Inflation Reduction Act and recently amended by the One Big Beautiful Bill Act (“OBBBA”), Section 45Z of the Internal Revenue Code offers a tax credit for the domestic production and sale of certain low-emission transportation fuels (“45Z Credit”). The 45Z Credit is worth $0.20 (or $1.00 for producers meeting prevailing wage and apprenticeship requirements) per gallon of renewable diesel, sustainable aviation fuel (“SAF”), renewable natural gas (“RNG”), and certain other low-carbon fuels produced domestically and sold.
Investment into data centers continues to increase significantly as the country builds out infrastructure to accommodate the digital economy and growth of artificial intelligence. Many states, including Texas, have now implemented various tax incentives to encourage investment in the state while simultaneously grappling with the taxable aspects of data center fuel. In November 2025, the
On October 29, 2025, Democratic members of the House Ways and Means Committee introduced H.R. 5862, the American Energy Independence and Affordability Act (the Bill). The legislation, introduced by Rep. Mike Thompson (D-Calif.), would restore clean energy tax credits from the Inflation Reduction Act (IRA) that were cut by the One Big Beautiful Bill Act (OBBBA), passed earlier this year.
The Clean Fuels Credit, codified under 26 U.S. Code Section 45Z, has quickly become a central focus for businesses pursuing opportunities in the evolving energy sector. Designed to incentivize the production of cleaner transportation fuels, this credit not only benefits fuel producers but has also started attracting interest from companies seeking to purchase credits under the transferability provisions of 26 U.S. Code Section 6418. Initially introduced as part of the Inflation Reduction Act (IRA), the Clean Fuels Credit stands out as one of the few tax incentives that received an extension through 2029 under the One Big Beautiful Bill Act (OBBBA). As the regulatory landscape continues to shift, it is essential for companies to understand both the strategic advantages and the legal requirements associated with this incentive.