A BILL to amend the Code of Virginia by adding in Article 13 of Chapter 3 of Title 58.1 a section numbered 58.1-439.12:13, relating to income tax; sustainable aviation fuel production tax credit.
HB1230 creates a new Virginia income tax credit for producers of sustainable aviation fuel (SAF). The credit would apply to taxable years beginning on or after January 1, 2027, and before January 1, 2032, and would be available only to eligible producers that manufacture SAF or SAF blends in Virginia using feedstock or biomass, with at least 10 percent of that feedstock or biomass grown or produced in the Commonwealth. To qualify, the fuel must meet detailed federal and industry standards and achieve at least a 50 percent lifecycle greenhouse gas emissions reduction compared with petroleum-based jet fuel.
The credit equals the lesser of $0.75 per gallon produced or $5 million per taxpayer per year, is nonrefundable, and may be carried forward for up to five additional tax years. The total statewide amount of credits is capped at $20 million per taxable year, and the Department of Taxation would allocate credits on a first-come, first-served basis. The bill also directs the Tax Commissioner to issue guidelines for claiming the credit, exempt from the Administrative Process Act.
The bill would add a new section, § 58.1-439.12:13, to Virginia’s income tax code and create a targeted tax incentive for SAF production. It would affect taxpayers subject to the corporate and individual income taxes under §§ 58.1-320 and 58.1-400, as well as partnerships, LLCs, and S corporations through pass-through allocation rules. The measure is designed to encourage in-state clean fuel manufacturing and related agricultural or biomass supply chains, while limiting fiscal exposure through annual and per-taxpayer caps.
The available legislative history suggests the bill was viewed cautiously and did not advance quickly, as it was continued to the next session in the House Finance Committee by voice vote. That outcome indicates some interest in the policy but not enough consensus for immediate passage. No recorded floor votes or committee transcript remarks are available, so the overall sentiment can only be inferred from the bill’s stalled status and the absence of recorded opposition or support statements.
Likely points of contention include the fiscal cost of the credit, given the $20 million annual statewide cap and the potential for significant revenue loss, and whether the incentive is sufficiently targeted to Virginia-based production. The eligibility rules may also be debated because they require complex lifecycle emissions testing, federal and ASTM compliance, and a minimum in-state feedstock threshold, which could limit participation. Supporters would likely emphasize economic development, clean energy, and aviation decarbonization, while skeptics may question whether the credit is an efficient use of tax policy or whether it favors a narrow industry segment.