This notice publishes the 2026 calendar-year inflation adjustment factor for the section 45U zero-emission nuclear power production credit, as well as the inflation adjustment factors and…

# SECTION 1. PURPOSE

This notice publishes the inflation adjustment factors and applicable amounts, as appropriate, for calendar year 2026 for the zero-emission nuclear power production credit under § 45U of the Internal Revenue Code (Code) (the § 45U credit), the credit for production of clean hydrogen under § 45V of the Code (the § 45V credit), and the clean fuel production credit under § 45Z of the Code (the § 45Z credit). These inflation adjustment factors and applicable amounts, as appropriate, are used to determine the corresponding credit amounts under §§ 45U, 45V, and 45Z.

# SECTION 2. BACKGROUND

.01 Section 45U.

Section 45U was added to the Code by section 13105 of Public Law 117-169, 136 Stat. 1818, 1929 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), to provide an income tax credit for producing electricity at a qualified nuclear power facility.

Section 45U(a) provides that, for purposes of § 38, the § 45U credit for any taxable year is an amount equal to the amount by which the product of 0.3 cents (the amount provided in § 45U(a)(1)(A)) and the kilowatt hours of electricity the taxpayer produced at a qualified nuclear power facility and sold to an unrelated person during the taxable year, exceeds the reduction amount for that taxable year.

Section 45U(b)(2) defines the reduction amount as the lesser of: (1) the amount determined under § 45U(a) before application of the reduction amount, or (2) the amount equal to 16 percent of the excess of, subject to other rules regarding the treatment of certain receipts, the gross receipts from any electricity produced by a qualified nuclear power facility (including any electricity services or products provided in conjunction with the electricity produced by such facility) and sold to an unrelated person during the taxable year, over the amount equal to the product of 2.5 cents (the amount provided in § 45U(b)(2)(A)(ii)(II)(aa)), multiplied by the kilowatt hours of electricity determined in § 45U(a).

Section 45U(c)(1) provides that the 0.3 cent amount in § 45U(a)(1)(A) and the 2.5 cent amount in § 45U(b)(2)(A)(ii)(II)(aa) are each adjusted by multiplying such amounts by the inflation adjustment factor (as determined under § 45(e)(2), by substituting “2023” for “1992” in § 45(e)(2)(B)) for the calendar year in which the sale of electricity (as defined in § 45U(b)(3)) occurred. If the 0.3 cent and 2.5 cent amounts, as increased under § 45U(c)(1), are not multiples of 0.05 cent and 0.1 cent, respectively, then such amounts are rounded to the nearest multiples of 0.05 cent and 0.1 cent, respectively.

.02 Section 45V.

Section 45V was added to the Code by IRA section 13204, 136 Stat. at 1935, to provide an income tax credit for producing qualified clean hydrogen.

Section 45V(a) provides that, for purposes of § 38, the § 45V credit for any taxable year is an amount equal to the product of (1) the kilograms of qualified clean hydrogen produced by the taxpayer during such taxable year at a qualified clean hydrogen production facility during the 10-year period beginning on the date such facility was originally placed in service, and (2) the applicable amount as determined under § 45V(b) with respect to such hydrogen.

Section 45V(b)(1) provides that, for purposes of § 45V(a)(2), the applicable amount is an amount equal to the applicable percentage of $0.60. If the amount so determined is not a multiple of 0.1 cent, then such amount is rounded to the nearest multiple of 0.1 cent.

Section 45V(b)(2) provides that, for purposes of § 45V(b)(1), the applicable percentage is determined based on the lifecycle greenhouse gas emissions (lifecycle GHG emissions) rate of the process used to produce any qualified clean hydrogen as follows: (i) if the lifecycle GHG emissions rate is not greater than 4 kilograms of carbon dioxide equivalent (CO2e) per kilogram of hydrogen, and not less than 2.5 kilograms of CO2e per kilogram of hydrogen, then the applicable percentage is 20 percent; (ii) if the lifecycle GHG emissions rate is less than 2.5 kilograms of CO2e per kilogram of hydrogen, and not less than 1.5 kilograms of CO2e per kilogram of hydrogen, then the applicable percentage is 25 percent; (iii) if the lifecycle GHG emissions rate is less than 1.5 kilograms of CO2e per kilogram of hydrogen, and not less than 0.45 kilograms of CO2e per kilogram of hydrogen, then the applicable percentage is 33.4 percent; and (iv) if the lifecycle GHG emissions rate is less than 0.45 kilograms of CO2e per kilogram of hydrogen, then the applicable percentage is 100 percent.

Section 45V(b)(3) provides that the $0.60 amount in § 45V(b)(1) is adjusted by multiplying such amount by the inflation adjustment factor (as determined under § 45(e)(2), by substituting “2022” for “1992” in § 45(e)(2)(B)) for the calendar year in which the qualified clean hydrogen is produced. If any amount as increased under § 45V(b)(3) is not a multiple of 0.1 cent, then such amount is rounded to the nearest multiple of 0.1 cent.

.03 Section 45Z.

Section 45Z was added to the Code by IRA section 13704, 136 Stat. at 1997, to provide an income tax credit for producing clean transportation fuel.

Section 45Z(a)(1) provides that, for purposes of § 38, the § 45Z credit for any taxable year is an amount equal to the product of (1) the applicable amount per gallon (or gallon equivalent) with respect to any transportation fuel which is produced by the taxpayer at a qualified facility and sold by the taxpayer in a specific manner during the taxable year, and (2) the emissions factor for such fuel as determined under § 45Z(b).

As enacted by the IRA, § 45Z(a)(2) and (3) provided the applicable amounts for transportation fuels. Specifically, for transportation fuel that was not a sustainable aviation fuel (non-SAF transportation fuel), the applicable amount was 20 cents under § 45Z(a)(2)(A), or $1.00 under § 45Z(a)(2)(B). For transportation fuel that was a sustainable aviation fuel (SAF transportation fuel), the applicable amount was 35 cents under § 45Z(a)(3)(A)(i), or $1.75 under § 45Z(a)(3)(A)(ii).

Section 45Z refers to the lower amount for a fuel as the base amount and to the higher amount for a fuel as the alternative amount. A taxpayer uses the alternative amount if it produces transportation fuel at a qualified facility that satisfies certain prevailing wage and apprenticeship requirements.

Section 70521(g)(2) of Public Law 119-21, 139 Stat. 72, 278 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, amended § 45Z by eliminating the higher applicable amounts for SAF transportation fuel. This amendment applies to fuel produced after December 31, 2025. Thus, for all transportation fuel produced after December 31, 2025, the applicable amount is either 20 cents or $1.00 as provided in § 45Z(a)(2). However, for transportation fuel produced between January 1, 2025, and December 31, 2025, the applicable amounts are those as enacted under the IRA and differ for SAF and non-SAF transportation fuel.

Section 45Z(c)(1) provides that, for calendar years beginning after 2024, the applicable amount must be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale of the transportation fuel occurs. Any amount adjusted under § 45Z(c)(1) must be rounded to the nearest cent. Section 45Z(c)(2) provides that the inflation adjustment factor for the § 45Z credit is the inflation adjustment factor determined and published by the Secretary of the Treasury or his delegate pursuant to § 45Y(c), determined by substituting “calendar year 2022” for “calendar year 1992” in § 45Y(c)(3).

.04 Sections 45(e)(2)(B) and 45Y(c)(3).

Sections 45(e)(2)(B) and 45Y(c)(3) define the term inflation adjustment factor as, with respect to a calendar year, a fraction, the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 1992. Under both statutes, the term GDP implicit price deflator means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year.

# SECTION 3. INFLATION ADJUSTMENT FACTORS AND APPLICABLE AMOUNTS

.01 2026 Section 45U Inflation Adjustment Factor.

For purposes of § 45U(c)(1), for sales of electricity occurring in calendar year 2026, the inflation adjustment factor is a fraction, the numerator of which is the GDP implicit price deflator for 2025 (128.986) and the denominator of which is the GDP implicit price deflator for 2023 (122.39), which yields an inflation adjustment factor of 1.0539.

For sales of electricity occurring in calendar year 2026, the amount provided in § 45U(a)(1)(A) is 0.3 cents (0.3 cents (or $0.003) x 1.0539, then rounded to the nearest multiple of 0.05 cent). The amount provided in § 45U(b)(2)(A)(ii)(II)(aa) is 2.6 cents (2.5 cents (or $0.025) x 1.0539, then rounded to the nearest multiple of 0.1 cent).

.02 2026 Section 45V Inflation Adjustment Factor and Applicable Amount.

For purposes of § 45V(b)(3), for qualified clean hydrogen produced in calendar year 2026, the inflation adjustment factor is a fraction, the numerator of which is the GDP implicit price deflator for 2025 (128.986) and the denominator of which is the GDP implicit price deflator for 2022 (118.023), which yields an inflation adjustment factor of 1.0929.

For qualified clean hydrogen produced in calendar year 2026, the applicable amount determined under § 45V(b)(1) is the product of $0.656 ($0.60 x 1.0929, then rounded to the nearest multiple of 0.1 cent) and the applicable percentage, which depends on the lifecycle GHG emissions rate of the qualified clean hydrogen production process. Thus, for qualified clean hydrogen produced through a process that results in a lifecycle GHG emissions rate of:

(i) not greater than 4 kilograms of CO2e per kilogram of hydrogen, and not less than 2.5 kilograms of CO2e per kilogram of hydrogen, the applicable amount is $0.131;

(ii) less than 2.5 kilograms of CO2e per kilogram of hydrogen, and not less than 1.5 kilograms of CO2e per kilogram of hydrogen, the applicable amount is $0.164;

(iii) less than 1.5 kilograms of CO2e per kilogram of hydrogen, and not less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable amount is $0.219; and

(iv) less than 0.45 kilograms of CO2e per kilogram of hydrogen, the applicable amount is $0.656.

.03 2026 Section 45Z Inflation Adjustment Factor and Applicable Amount.

For purposes of § 45Z(c), for transportation fuel sold in calendar year 2026, the inflation adjustment factor is a fraction, the numerator of which is the GDP implicit price deflator for 2025 (128.986) and the denominator of which is the GDP implicit price deflator for 2022 (118.023), which yields an inflation adjustment factor of 1.0929.

For all transportation fuel produced and sold in calendar year 2026, and for non-SAF transportation fuel produced in calendar year 2025 and sold in calendar year 2026:

(i) The base amount is 22 cents (20 cents x 1.0929, then rounded to the nearest cent) under § 45Z(a)(2)(A).

(ii) The alternative amount is $1.09 ($1.00 x 1.0929, then rounded to the nearest cent) under § 45Z(a)(2)(B).

For SAF transportation fuel produced in calendar year 2025 and sold in calendar year 2026:

(i) The base amount is 38 cents (35 cents x 1.0929, then rounded to the nearest cent) under § 45Z(a)(3)(A)(i) as enacted by IRA § 13704.

(ii) The alternative amount is $1.91 ($1.75 x 1.0929, then rounded to the nearest cent) under § 45Z(a)(3)(A)(ii) as enacted by IRA § 13704.

# SECTION 4. DRAFTING INFORMATION

The principal authors of this notice are Whitney Brady, Glenn Kats, and Andrew Clark of the Office of Associate Chief Counsel (Energy, Credits, and Excise Tax). For further information regarding this notice contact Whitney Brady at (202) 317-6325, Glenn Kats at (202) 317-3995, or Andrew Clark at (202) 317-6855 (not toll-free numbers).