Sustainable Aviation Fuel Gains National Support

U.S. Tax Credits and State Bills Expand Clean Fuel Programs

Sustainable aviation fuel (SAF) is gaining momentum in the U.S., with lawmakers at both federal and state levels supporting its growth through new tax policies and production incentives.

The federal government recently extended a key clean fuel tax credit through 2029, as part of a budget reconciliation law signed by President Donald Trump on July 4, 2025.

The credit initially expired in 2027 but now offers extra years for producers to scale up SAF development. Though the law lowers the value of SAF-specific credits and removes some federal funding, it still provides a long-term signal to the industry.

“We’re not yet at commercial-scale production and you need that longer lead time for these types of projects, so I think the extension is really key,” said Chris Bliley, senior vice president of regulatory affairs at Growth Energy.

The aviation industry aims to achieve net-zero emissions by 2050, and SAF is expected to play a major role. The International Air Transport Association estimates SAF could contribute 65% toward the goal.

Currently, U.S. SAF production is growing, rising from 5,000 to over 30,000 barrels per day between early 2024 and February 2025.

States are also stepping in. Iowa, Illinois, Minnesota, Nebraska, and Washington have already passed tax incentives. New York, Michigan, and Wisconsin lawmakers have proposed new bills to encourage SAF use.

In Wisconsin, Rep. David Steffen said he was inspired by a local company producing SAF and wants to support in-state jobs and farmers. His bill would require SAF materials to be domestically sourced.

“It’s a great opportunity for not only the environmental benefits that come with it but for our farmers, dairies and timber producers to access a brand-new market for their product,” Steffen said.

Some critics argue the new federal tax changes benefit older biofuels more than SAF. However, experts believe that state-level action and rising industry demand will keep SAF development moving forward.

This growing focus could help rural economies and advance clean energy efforts across the U.S.