Top: Clean Energy’s new RNG fueling station in Davenport, Florida. Photo courtesy Business Wire

A bipartisan bill — Renewable Natural Gas Incentive Act of 2025 — to provide federal tax credits for renewable natural gas (RNG) used for motor vehicle fuel was recently introduced by Sens. Tillis (R-NC) and Warner (D-VA) and Reps. Fitzpatrick (R-PA) and Sanchez (D-CA). The legislation, S. 1252/H.R. 2596, is modeled after the Alternative Fuels Tax Credit, includes certified blended RNG, and lists a $1-per-gallon tax credit. It is applicable to businesses, individuals, and tax-exempt entities that sell or use the fuel. “This bill aims to reduce emissions and greenhouse gases, spur job creation, strengthen domestic energy supply chains, and to provide long-term certainty in the remaining credit in place through 2035,” notes The Transport Project. “The general rule is that the credit goes to the seller in the case of retail transactions. If the fuel is dispensed using a private fueling station, the credit may go to the user of the fuel. For businesses and tax-exempt entities (e.g., federal, state and local governments), the credit must first be taken as an excise tax offset against taxes otherwise owed on alternative fuel they use or sell, and then it may be taken as a refundable credit. Many tax-exempt entities will not owe any excise taxes and can immediately apply for a payment that essentially amounts to a rebate. Any gallon of fuel is eligible for either the Alternative Fuels Tax Credit or the Renewable Natural Gas Fueling Credit, but not both.”

To get the credit, the taxpayer must get certification from the producer of the RNG that identifies the product produced and the percentage of RNG in the product. This certification is modeled after existing biodiesel certification. The RNG tax incentive could lower fuel costs for fleets using natural gas-powered trucks, making RNG competitive with diesel while offering substantial emissions reductions.