§ 3-72 — Sustainable Aviation Fuel Purchase Credit

(a) From July 1, 2023 through December 31, 2032, sustainable aviation fuel sold to or used by an air common carrier, certified by the carrier to be used in Illinois, earns a credit in the amount of $1.50 per gallon of sustainable aviation fuel purchased. The credit earned shall be referred to as the Sustainable Aviation Fuel Purchase Credit. Only that portion of each gallon of aviation fuel that consists of sustainable aviation fuel, as defined in this Section, is eligible to earn the credit. The credit is earned at the time sustainable aviation fuel is purchased for use in Illinois. The amount of credit that is earned is based on the number of whole gallons of sustainable aviation fuel purchased for use in Illinois. Partial gallons will not earn a credit. Credits may be used at the same time as they are earned. For a sale or use of aviation fuel to qualify to earn the Sustainable Aviation Fuel Purchase Credit, taxpayers must retain in their books and records a certification from the producer of the aviation fuel that the aviation fuel sold or used and for which a sustainable aviation fuel purchase credit was earned meets the definition of sustainable aviation fuel under this Section. The documentation must include detail sufficient for the Department to determine the number of gallons of sustainable aviation fuel sold or used. A Sustainable Aviation Fuel Purchase Credit earned by an air common carrier expires on December 31, 2032. The Sustainable Aviation Fuel Purchase Credit is a non-transferable and non-refundable credit. Taxpayers shall account for the earning and usage of Sustainable Aviation Fuel Purchase Credits on each monthly return filed with the Department, as deemed necessary by the Department. The purchaser of sustainable aviation fuel shall certify to the seller of the aviation fuel that the purchaser is satisfying all or part of its liability for the 6.25% tax under the Use Tax Act or the Service Use Tax Act that is due on the purchase of aviation fuel by use of the sustainable aviation fuel purchase credit. The Sustainable Aviation Fuel Purchase Credit certification must be dated and shall include the name and address of the purchaser, the purchaser's registration number, if registered, the credit being applied, and a statement that the State Use Tax or Service Use Tax liability is being satisfied with the air common carrier's sustainable aviation fuel purchase credit. An air common carrier-purchaser of aviation fuel may utilize the Sustainable Aviation Fuel Purchase Credit in satisfaction of the 6.25% tax arising from the purchase of aviation fuel, but not in satisfaction of penalty or interest. Until January 1, 2033, on an annual basis running from January through December each year, no credit may be earned by an air common carrier for soybean oil-derived sustainable aviation fuel once air common carriers in this State have collectively purchased sustainable aviation fuel containing 10,000,000 gallons of soybean oil feedstock. If, in any year, air common carriers collectively purchase sustainable aviation fuel containing more than 10,000,000 gallons of soybean oil feedstock for use in this State, then, in the month in which taxpayer reporting shows that the credit earned from these purchases exceeds the cap, the Department shall first determine the remaining number of gallons of soybean oil feedstock available to earn the credit for that year by subtracting from 10,000,000 the number of gallons of soybean oil feedstock collectively purchased that year based on the prior month's taxpayer reporting. The Department shall then allocate the credit from these remaining gallons of soybean oil feedstock available to earn the credit for that year by allowing credit to each air common carrier in the same proportion as the number of gallons of soybean oil feedstock reported as having been purchased by each air common carrier during the month in which the cap is exceeded is to all of the gallons of soybean oil feedstock reported as having been purchased during that month. The earning of any credit in excess of this shall be disallowed for the remainder of the year. For any credit that was used, the earning of which was disallowed in the process described in this paragraph, any resulting tax shall be due on or before April 20th of the year following the year in which the 10,000,000 gallon cap on soybean oil feedstock was exceeded and shall be reported and paid on the aviation fuel tax return. Any credit that is earned for the purchase of soybean oil feedstock but not timely reported in a year in which the cap is exceeded is disallowed. A Sustainable Aviation Fuel Purchase Credit certification provided by the air common carrier may be used to satisfy the retailer's or serviceman's 6.25% tax liability on aviation fuel under the Retailers' Occupation Tax Act or Service Occupation Tax Act for the credit claimed. (b) As used in this Section, "sustainable aviation fuel" means liquid fuel that meets the criteria set forth in subsections (d) and (e) of Section 40B of the federal Internal Revenue Code of 1986 or: (1) consists of synthesized hydrocarbons and meets the requirements of: (A) the American Society for Testing and Materials International Standard D7566; or (B) the Fischer-Tropsch provisions of American Society for Testing and Materials International Standard D1655, Annex A1; (2) prior to June 1, 2028, is derived from biomass resources, waste streams, renewable energy sources, or gaseous carbon oxides, and beginning on June 1, 2028 is derived from domestic biomass resources; (3) is not derived from any palm derivatives; and (4) the fuel production pathway for the sustainable aviation fuel achieves at least a 50% lifecycle greenhouse gas emissions reduction in comparison with petroleum-based jet fuel, as determined by a test that shows: (A) that the fuel production pathway achieves at least a 50% reduction of the aggregate attributional core lifecycle emissions and the positive induced land use change values under the lifecycle methodology for sustainable aviation fuels adopted by the International Civil Aviation Organization with the agreement of the United States; or (B) that the fuel production pathway achieves at least a 50% reduction of the aggregate attributional core lifecycle greenhouse gas emissions values utilizing the most recent version of Argonne National Laboratory's GREET model, inclusive of agricultural practices and carbon capture and sequestration.

Legislative History

(Source: P.A. 102-1125, eff. 2-3-23; 103-9, eff. 6-7-23.)