Loading the player...

DEFINITION of 'Fuel Tax Credit'

A federal subsidy that allows businesses to reduce their taxable income dollar for dollar based on specific types of fuel costs. There are several types of fuel credits. For example, a 2005 fuel credit to companies that produce biofuels provided a tax credit to companies that combined diesel derived from biomass with diesel derived from petroleum to create an alternative fuel mixture.

BREAKING DOWN 'Fuel Tax Credit'

The black liquor tax credit, once part of the alternative fuel credit, was a tax loophole allowed to companies for using black liquor - a paper production byproduct that the paper and pulp companies were already using - mixed with diesel as a fuel source. The paper and pulp companies began adding diesel to their black liquor so they could claim a tax credit. This achieved the reverse of what the bill intended, increasing the use of fossil fuels and reducing the use of biofuels.



RELATED TERMS
  1. Black Liquor Tax Credit

    A term coined by the forest-products industry to describe an ...
  2. Alternative Fuels Tax Credit

    A non-refundable tax credit awarded to taxpayers who use non-alcohol ...
  3. Alcohol Fuels Credit

    One of several general business credits included on the General ...
  4. Business Tax Credits

    A number of federal income tax credits available to businesses ...
  5. Biofuel

    A type of energy derived from renewable plant and animal materials. ...
  6. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
Related Articles
  1. Investing

    Will Raising Fuel Efficiency Standards Kill the Oil Industry?

    Diminishing returns to fuel efficiency means the oil industry is safe in the medium and long term.
  2. Investing

    The Biofuels Debate Heats Up

    Interest in these new energy sources is growing. Should you buy in?
  3. Investing

    3 Economies Benefiting From Biofuels

    Learn about what the largest biofuel-producing countries are achieving and how these fuels are helping their economies through jobs and waste reduction.
  4. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Investing

    Why Low Fuel Prices Aren't Enough for EU Airlines

    Low jet fuel prices alone are not enough to guarantee success in Europe’s fragmented airline market.
  7. Insights

    Delta Loses a Half-Billion Dollars on Oil Hedging (DAL)

    Delta Air Lines reportedly lost $450 million in the latest quarter on hedges that speculated the price of oil would rebound faster
  8. Small Business

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  9. Investing

    Debunking Biofuels: Do They Really Raise Food Prices?

    Learn about the two sides of the argument on the effect biofuels have on food prices and about other factors that affect food prices.
  10. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
RELATED FAQS
  1. How can I hedge against rising diesel prices?

    In early 2007, the New York Mercantile Exchange announced that traders would be able to buy or sell futures contracts on ... Read Answer >>
  2. To what extent will changing fuel costs affect the profitability of the airline industry?

    Learn how changing fuel costs affect the profitability of the airline industry and why airline operators do not immediately ... Read Answer >>
  3. Is it possible to have a credit limit that's too high?

    Avoid these pitfalls when working with high credit limits, and learn how to increase your credit score by increasing your ... Read Answer >>
  4. What are the economic implications of government subsidies on fuel costs?

    In order to make the price of oil more affordable to its citizens, governments sometimes provide subsidies, which can allow ... Read Answer >>
  5. What is the difference between bad credit and no credit?

    The answer to this question will depend on what information (if any) is found on your credit report, such as any bankruptcy ... Read Answer >>
  6. What are the major expenses that affect companies in the airline industry?

    Discover the major expenses that airlines must pay. The two largest are labor costs and fuel costs. Fuel costs are the biggest ... Read Answer >>
Hot Definitions
  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  2. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  3. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  4. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  5. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  6. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
Trading Center