45Z Tax Credit Review Shows Potential Economic Benefits for Midwest Farmers

The Clean Fuel Production Tax Credit (45Z) is set to benefit Midwest corn and soybean producers who implement approved practices, potentially creating significant economic value. According to a recent review of the tax credit, the total potential value created per acre can range from $39 to $243, depending on various factors such as rest-of-system carbon intensity assumptions.

As part of the review, calculations were performed using Illinois corn as an example, showing that cover crop adoption could lead to a feedstock carbon intensity reduction. This reduction, combined with assumed rest-of-system carbon intensity values, resulted in estimated total tax credit values ranging from $107 to $243 per acre.

While these estimates do not predict what farmers will actually receive, they provide a useful screening tool for producers considering implementing recognized conservation practices. To prepare for potential market opportunities, producers are advised to maintain clear field-level records on conservation practices and supporting materials that could help verify practice adoption.