Instructions for Form 8864

Instructions for Form 8864

(Rev. December 2025)

Biodiesel, Renewable Diesel, or Sustainable Aviation Fuels Credit

Section references are to the Internal Revenue Code

unless otherwise noted.

Future Developments

For the latest information about developments related to

Form 8864 and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form8864.

What’s New

Small agri-biodiesel producer credit extension. P. L.

119-21, commonly known as the One Big Beautiful Bill

Act, extended and modified the section 40A small

agri-biodiesel producer credit. The credit is extended

through December 31, 2026. Don’t claim the small

agri-biodiesel producer credit for fuel sold or used after

2026.

Qualified agri-biodiesel fuel. For fuel sold or used after

June 30, 2025, the qualified agri-biodiesel fuel must be

exclusively derived from feedstock that was produced or

grown in the United States, Mexico, or Canada.

Credit rates. For fuel sold or used from January 1, 2025,

through June 30, 2025, the credit rate is $.10 per gallon.

For fuel sold or used after June 30, 2025, but before

January 1, 2027, the rate increases to $.20 per gallon.

Transfer of the small agri-biodiesel producer credit.

P. L. 119-21 allows a section 6418 transfer election for fuel

sold or used after June 30, 2025. Eligible taxpayers,

partnerships, and S corporations can elect to transfer all

or part of the credit amount otherwise allowed as a

general business credit to an unrelated third-party buyer in

exchange for cash. Eligible taxpayers don’t include

applicable entities. See Credit transfers, later.

Use the December 2025 Form 8864 to report any

biodiesel, renewable fuel, or sustainable aviation fuel

(SAF) credit you received from a fiscal-year partnership, S

corporation, cooperative, estate, or trust whose tax year

began in 2024 (when the credit was still available) and

ends during your 2025 tax year.

Partnerships, S corporations, cooperatives, estates,

and trusts must file this form to claim the credit. All other

taxpayers aren’t required to complete or file this form if

their only source for this credit is a partnership, S

corporation, cooperative, estate, or trust. Instead, they can

report this credit directly on the appropriate line of Form

3800, General Business Credit.

Credit transfers. Under section 6418, eligible taxpayers,

partnerships, and S corporations can elect to transfer all

or part of the credit amount otherwise allowed as a

general business credit to an unrelated third party in

exchange for cash. For more information on credit

transfers, see Transfer of Eligible Credits Under Section

6418 in the Instructions for Form 3800.

Pre-filing registration requirement for transfers.

Before you file your tax return, if you intend to make a

transfer election on Form 3800 for the credit, you must

complete a pre-filing registration. To register, go to

IRS.gov/Register for Elective Payment or Transfer of

Credits. See Pub. 5884, Inflation Reduction Act (IRA) and

CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool,

for more information. Also, see Registering for and Making

EPEs and Transfer Elections in the Instructions for Form

3800.

Definitions and Special Rules

Agri-Biodiesel

Pre-filing registration requirement for credit transfers. The IRS has established a pre-filing registration

process that must be completed prior to electing to

transfer the small agri-biodiesel producer credit. See

Pre-filing registration requirement for transfers, later.

Agri-biodiesel means biodiesel derived solely from virgin

oils, including esters derived from virgin vegetable oils

from corn, soybeans, sunflower seeds, cottonseeds,

canola, crambe, rapeseeds, safflowers, flaxseeds, rice

bran, mustard seeds, and camelina; and from animal fats.

Reminder

Qualified Agri-Biodiesel Production

Expired credits. The credit period for the section 40A,

biodiesel credit, biodiesel mixture credit, and renewable

diesel credit, and the section 40B, sustainable aviation

fuels credit, expired for fuel sold or used after December

31, 2024.

General Instructions

Purpose of Form

Use Form 8864 to claim the section 40A small

agri-biodiesel producer credit. Claim the credit for the tax

year in which the sale or use occurs.

Jan 5, 2026

Qualified agri-biodiesel production means up to 15 million

gallons of agri-biodiesel that is produced by an eligible

small agri-biodiesel producer (defined below), and that

during the tax year:

1. Is sold by such producer to another person:

a. For use by such person in the production of a

qualified biodiesel mixture in such other person’s trade or

business (other than casual off-farm production),

b. For use by such person as a fuel in a trade or

business, or

c. Who sells such agri-biodiesel at retail to another

person and places such agri-biodiesel in the fuel tank of

such other person; or

Instructions for Form 8864 (Rev. 12-2025) Catalog Number 66373S

Department of the Treasury Internal Revenue Service www.irs.gov

2. Is used or sold by such producer for any purpose

described in (1).

3. If sold or used after June 30, 2025, is exclusively

derived from a feedstock that was produced or grown in

the United States, Mexico, or Canada.

Note: Production of renewable diesel isn’t qualified

agri-biodiesel production.

Eligible small agri-biodiesel producer. An eligible

small agri-biodiesel producer is a person who, at all times

during the tax year, has a productive capacity for

agri-biodiesel not in excess of 60 million gallons.

Aggregation rule. All members of the same controlled

group of corporations (see section 267(f)) and all persons

under common control (see section 52(b) but treat an

interest of more than 50% as a controlling interest) are

treated as one person for purposes of the 15- and

60-million-gallon limits.

Partnership, S corporation, and other pass-through

entities. The 15- and 60-million-gallon limits discussed

above are applied at both the entity level and at the

partner or similar level.

Registration

To claim the small agri-biodiesel producer credit, all

producers must be registered with the IRS. See Form 637,

Application for Registration.

Recapture of Credit

You must pay a tax (recapture) on each gallon of biodiesel

or renewable diesel on which a credit was claimed at the

rate used to figure the credit if you:

• Use it (including a mixture) other than as a fuel;

• Buy it at retail and use it to create a mixture;

• Separate it from a mixture; or

• Use agri-biodiesel on which the small agri-biodiesel

producer credit was claimed for a use not described under

Qualified Agri-Biodiesel Production, earlier.

Report the tax on Form 720, Part II, IRS No. 117, for the

quarter in which you did any of the above.

Additional Information

See Pub. 510, Excise Taxes.

Specific Instructions

Line A

If applicable, enter your pre-filing registration number that

you received from the IRS. See Pre-filing registration

requirement for transfers.

Lines 1, 2, 3, 4, 5, and 6

These lines are now shown as “Reserved for future use.”

Line 7

Use this line to figure the qualified agri-biodiesel for fuel

sold or used before July 1, 2025. The credit rate is $.10

per gallon from January 1, 2025, through June 30, 2025.

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Line 8

Use this line to figure the qualified agri-biodiesel for fuel

sold or used after June 30, 2025, but before January 1,

2027. The credit rate is $.20.

Line 9

Include this amount in income, under “other income” on

the applicable line of your income tax return, even if you

can’t use all of the credit because of the tax liability limit.

However, if you’re subject to alternative minimum tax

(AMT), this amount isn’t income in figuring AMT and must

be subtracted when figuring your alternative minimum

taxable income. Do this by including this amount on the

appropriate line of:

• Form 6251, Alternative Minimum Tax—Individuals

• Form 1041, Schedule I

Line 10

Use line 10 only if you’ve received a credit that was

allocated to you from a pass-through entity (an S

corporation, partnership, estate, trust, or cooperative).

If you are allocated a small agri-biodiesel producer

credit from a pass-through entity, the entity must tell you

the number of gallons for which it claimed the credit and

its productive capacity for agri-biodiesel. You, as a

shareholder, partner, beneficiary, or patron are subject to

the 15-million-gallon limitation for qualified agri-biodiesel

production and the 60-million-gallon productive capacity

limitation for an eligible small agri-biodiesel producer.

Line 11

Report this amount on Form 3800, Part III, line 1l.

However, if the amount on line 10 includes the SAF credit,

report the amount of the SAF credit on Form 3800, Part III,

line 1ff.

Line 12

A cooperative, estate, or trust allocating the small

agri-biodiesel credit must give the patron or beneficiary a

statement providing them with the number of gallons for

which it claimed the credit and its productive capacity for

agri-biodiesel. An estate or trust must also provide the

amount of the small agri-biodiesel credit included as part

of the pass-through credit. See the instructions for line 10

above.

Cooperatives. A cooperative described in section

1381(a) can elect to allocate any part of the small

agri-biodiesel producer credit to patrons of the

cooperative. The credit is allocated pro rata among the

patrons eligible to share in patronage dividends on the

basis of the quantity or value of business done with or for

the patrons for the tax year.

If the cooperative is subject to the passive activity rules,

include on line 10 any Form 8864 credits from passive

activities disallowed for prior years and carried forward to

this year. Complete Form 8810, Corporate Passive Activity

Loss and Credit Limitations, to determine the allowed

producer credits that can be allocated to patrons. For

details, see the Instructions for Form 8810.

The cooperative is deemed to have made the election

by completing line 12. However, the election isn’t effective

unless:

Instructions for Form 8864 (Rev. 12-2025)

• It’s made on a timely filed return (including extensions);

and

• The cooperative designates the apportionment in a

written notice or Form 1099-PATR, Taxable Distributions

Received From Cooperatives, mailed to its patrons during

the payment period described in section 1382(d).

If you timely filed your return without making an

election, you can still make the election by filing an

amended return within 6 months of the due date of the

return (excluding extensions). Enter “Filed pursuant to

section 301.9100-2” on the amended return.

Once made, the election can’t be revoked.

Estates and trusts. Allocate the biodiesel, renewable

diesel, or sustainable aviation fuel credit on line 11

between the estate or trust and the beneficiaries in the

same proportion as income was allocated, and enter the

beneficiaries’ share on line 12.

If the estate or trust is subject to the passive activity

rules, include on line 10 any Form 8864 credits from

passive activities disallowed for prior years and carried

forward to this year. Complete Form 8582-CR, Passive

Activity Credit Limitations, to determine the allowed credit

that must be allocated between the estate or trust and the

beneficiaries. For details, see the Instructions for Form

8582-CR.

Line 13

Report this amount on Form 3800, Part III, line 1l.

However, if the amount on line 10 includes the SAF credit,

report the amount of the SAF credit on Form 3800, Part III,

line 1ff.

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If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,

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Instructions for Form 8864 (Rev. 12-2025)

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