Iowa Soybean Farmers Welcome Latest 45Z Guidance by Treasury

February 3, 2026 | Brock Johnston

Ankeny, Iowa — The Iowa Soybean Association (ISA) applauds today’s action by the U.S. Department of the Treasury for releasing updated proposed guidance that addresses much needed improvements to the Section 45Z Clean Fuel Production Credit, an essential tool for supporting biofuels including biodiesel made from U.S. soybeans. The changes include stronger support for domestic feedstocks like U.S. soybeans following amendments enacted within the One Big Beautiful Bill Act (OBBBA) in July 2025.

“Soybean farmers have long supported updates to federal biofuel policies that prioritize soy-based fuels, which also help build domestic markets for the crops we produce,” says Tom Adam, ISA president and soybean farmer from Harper. “This long-awaited guidance will help support Iowa’s soybean farmers, processors and biofuel producers, while providing a dose of much needed certainty heading into the spring planting season.”

Key changes addressed in the Treasury’s latest guidance ensure the 45Z tax credit supports domestically produced biofuels by disqualifying feedstocks imported from outside North America.

“While the 45Z credit is a key piece of biofuel policy, work is still needed to ensure Iowa farmers are positioned to help support our nation’s energy leadership,” says Matt Herman, ISA chief officer of demand and advocacy. “We look forward to a swift finalization of EPA’s Renewable Volume Obligation under the federal Renewable Fuel Standard and review of the forthcoming GREET calculators, including release of the various GREET calculators.”

Renewable Volume Obligations (RVO) remain the largest driver of domestic soybean and corn consumption. EPA has proposed 5.61 billion gallons and 5.86 billion gallons for biomass-based diesel in 2026 and 2027, which, if finalized, would mark a significant volume increase from recent years.

Iowa is the nation’s leading biodiesel-producing state and soybean oil producer. In 2025, Iowa used 1.68 billion pounds of soybean oil to produce 224.5 million gallons of biodiesel. This volume is equivalent to nearly 144 million bushels of soybeans, or roughly 24% of the state’s total crop. According to a 2024 study by Decision Innovation Solutions, biodiesel contributes $123 million in labor income, $520 million in value added and $2.2 billion in total output (sales) to Iowa’s economy.

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The Iowa Soybean Association is Driven To Deliver market demand, production research, information and insights and regulatory action benefiting Iowa's 37,000 soybean farmers and the industry. For more information, visit iasoybeans.com.

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