WASHINGTON - A group of farm-state Republican lawmakers is urging the Trump administration to ensure that new rules for the 45Z biofuel tax credit properly recognize conservation and regenerative agriculture practices, warning that farmers could otherwise be left out of a key clean-fuel incentive. The request comes as the Internal Revenue Service finalizes regulations for the credit and with the 2026 planting season approaching, raising concerns about whether producers will have clarity in time to benefit.

The 45Z tax incentive, created in the Inflation Reduction Act and later expanded in 2025, is designed to boost domestic renewable fuel production using U.S. crops such as corn and soybeans. Because the credit's value depends on the carbon intensity of the entire production chain, farmers' on-field practices could play a crucial role in determining whether feedstocks qualify for premium payments.

In a letter sent to Treasury Secretary Scott Bessent, Agriculture Secretary Brooke Rollins, and Energy Secretary Chris Wright, lawmakers said the final rule must clearly define the farm practices that can generate low-carbon feedstocks eligible for the incentive. The letter was led by Sen. Joni Ernst of Iowa and Rep. Mariannette Miller-Meeks of Iowa, along with a group of farm-state senators and representatives.

"It is critical the final rule clearly identifies the types of on-farm conservation practices capable of generating lower-carbon feedstocks and ultimately qualifying for a premium under 45Z," the lawmakers wrote. They pointed to several widely used practices that should qualify, including:

• No-till and reduced tillage systems

  

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• Cover crops

• Strip-till methods

• Manure application

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• Precision fertilizer management

Supporters argue these practices reduce greenhouse-gas emissions while improving soil health and yields, making them central to efforts to decarbonize the agricultural supply chain. The 45Z Clean Fuel Production Credit replaces earlier flat tax incentives by linking the value of the subsidy to the carbon intensity score of a fuel's full lifecycle.

Under the system, renewable fuels produced with lower-carbon feedstocks - such as corn grown with regenerative agriculture practices - could qualify for higher tax credits. The policy is intended to strengthen U.S. energy independence, expand markets for farm commodities and support the rural biofuel economy.

"I'm urging the administration to keep the pedal to the metal when it comes to 45Z by acknowledging and rewarding farmers for their work out in the field," Ernst said in a statement. She added that finalizing the rule is essential to "add value to American-grown crops, create jobs and lower prices at the pump."

One of the central issues in the rulemaking process is how regulators will measure the carbon intensity of agricultural feedstocks. The U.S. Department of Agriculture is currently developing a feedstock carbon-intensity calculator, which could eventually be integrated into the Energy Department's GREET lifecycle emissions model.

Treasury officials indicated in a recent proposal that the USDA tool may eventually be incorporated into the 45Z rules, but they did not provide a timeline for that integration. Lawmakers say completing that integration quickly is essential.

"Only with this integration can farmers' real-world conservation efforts and regenerative practices be accurately measured and rewarded under 45Z," the letter states. The timing of the rule is critical for farmers planning their cropping strategies for the coming year.

"Planting season is a few short weeks away in many parts of the country, and farmers need clear answers soon to fully take advantage of 45Z," the lawmakers warned. They also cautioned regulators against repeating a requirement used under a previous sustainable aviation fuel tax credit that forced producers to bundle multiple practices together to qualify.

Instead, they argue the new credit should allow farmers flexibility to adopt practices suited to their operations, while avoiding excessive paperwork that could discourage participation. The lawmakers also urged regulators to include several additional provisions in the final guidance, including:

• Rapid integration of the USDA feedstock calculator into the GREET model

• Separate emissions pathways for renewable natural gas derived from animal manure

• A "book-and-claim" system allowing farmers to sell low-carbon data certificates to fuel producers independently from the physical grain they produce.

Such a system, supporters say, could create new revenue streams for farmers participating in low-carbon supply chains. The debate comes as the U.S. ethanol sector faces increasing pressure to reduce its carbon footprint, particularly as Brazil expands its role in global biofuel markets. Improving the carbon intensity of American corn could help maintain competitiveness in international fuel markets, while also supporting domestic renewable fuel mandates.