New SAF Tax Credit Included in Proposed California Budget

California’s proposed 2026–27 state budget includes a new tax credit aimed at encouraging in-state production of sustainable aviation fuel (SAF). The measure would provide a credit against diesel excise tax liability to help improve the competitiveness of sustainable aviation fuel relative to conventional jet fuel. The proposal is intended to support California’s climate and air quality objectives by incentivising private investment and scaling up low-carbon aviation fuels, subject to approval by the state legislature.

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