Fuel Taxes and Fuel Tax Credits and Refunds
Chapter 1 defines the types of fuel, taxable events, and exemptions or exceptions to the fuel taxes. Chapter 2, previously Publication 378, provides information on and definitions of the nontaxable uses and explains how to make a claim.Biodiesel and Ethanol (VEETC) Tax Credit

The American Jobs Creation Act of 2004 (Public Law 108-357) created tax incentives biodiesel fuels and extended tax credit for fuel ethanol. The biodiesel credit is available to blenders/retailers beginning in January 2005. It also established the Volumetric Ethanol Excise Tax Credit (VEETC), which provides ethanol blenders/retailers with $.51 per pure gallon of ethanol blended or $.0051 per percentage point of ethanol blended (i.e., E10 is eligible for $.051/gal; E85 is eligible for $.4335/gal). The incentive is available until 2010.

Section 1344 of the Energy Policy Act of 2005 extended the tax credit for biodiesel producers through 2008. The credits are $.51 per gallon of ethanol at 190 proof or greater, $1.00 per gallon of agri-biodiesel, and $.50 per gallon of waste-grease biodiesel. If the fuel is used in a mixture, the credit amounts to $.0051 per percentage point ethanol or $.01 per percentage point of agri-biodiesel used or $.0050 per percentage point of waste-grease biodiesel (i.e. E100 is eligible for $.51 per gallon)

For more information, visit http://www.irs.gov/pub/irs-pdf/p510.pdf .