Renewable Natural Gas Incentive Act of 2025

This bill amends the Internal Revenue Code to create a tax credit for renewable natural gas used as motor vehicle, motorboat, or aviation fuel, aiming to promote its use, reduce emissions, and create jobs.

Sec. 2, Increased credit for renewable natural gas: The bill adds a new renewable natural gas fuel credit under section 6426 of the tax code. The credit equals $1.00 per gallon of renewable natural gas (or per gasoline gallon equivalent for nonliquid gas) sold or used as fuel in a motor vehicle, motorboat, or aviation. Renewable natural gas is defined as compressed or liquefied gas derived from biomass, produced by a registered person, and certified. Blended renewable natural gas (mixed with other natural gas) can qualify if the taxpayer has a contract with the registered producer specifying the gallons and period, and the producer provides certification. The credit does not apply to sales or uses after December 31, 2035.

Sec. 2(b), Application of other rules: The bill updates registration requirements to include renewable natural gas producers. It also denies double benefits by including the new credit in existing anti-double-benefit rules. No credit is allowed for renewable natural gas produced outside the U.S. for use outside the U.S. Energy equivalency rules are extended to renewable natural gas.

Sec. 2(c), Payments: The bill allows payments from the Secretary to persons who sell or use renewable natural gas in their trade or business for the purposes described, equal to the credit amount. These payments terminate after December 31, 2035. Conforming amendments update cross-references in related payment provisions.

Sec. 2(d), Registration: The bill requires every person producing renewable natural gas to register under section 4101(a) of the tax code.

Sec. 2(e), Effective date: The amendments apply to fuel sold or used in calendar quarters beginning after the date the bill is enacted.