IRS Unveils 2025 Inflation Adjustments for Sections 45U, 45V, 45Z

TL/DR –

The IRS has unveiled the inflation-adjusted credit amounts for 2025 applicable to tax credits under Sections 45U, 45V, and 45Z of the Internal Revenue Code. Section 45U offers a tax credit for producing electricity at a nuclear power facility, Section 45V provides a credit for producing qualified clean hydrogen, and Section 45Z gives a credit for producing clean transportation fuel. The credits are adjusted annually for inflation; for 2025, the adjustment factors are 1.0242 for electricity, 1.0611 for clean hydrogen, and 1.0611 for clean transportation fuel.

Updated Inflation-Adjusted Credit Amounts Declared by IRS

The IRS published Notice 2025-37 on July 21, 2025, detailing the inflation-adjusted credit amounts for 2025. These are tied to tax credits under Section 45U, 45V and 45Z of the Internal Revenue Code, established by the Inflation Reduction Act of 2022.

Section 45U offers a tax credit for producing electricity from qualified nuclear power facilities. Section 45V provides a tax credit for producing qualified clean hydrogen. Section 45Z affords a tax credit for the production of clean transportation fuel.

These tax credit amounts are adjusted annually for inflation and communicated through an IRS notice. Notice 2025-37 offers the following updates:

Section 45U: Zero-Emission Nuclear Power Production Credit

• Inflation adjustment factor for 2025 electricity sales: 1.0242
  • This factor is calculated from the 2024 GDP implicit price deflator (125.234) divided by the 2023 GDP implicit price deflator (122.273).
• Credit amount:
  • base rate – 0.3 cents
  • reduction rate – 2.6 cents

Section 45V: Production of Clean Hydrogen Credit

• Inflation adjustment factor for 2025 clean hydrogen production: 1.0611
  • This factor is calculated using the 2024 GDP implicit price deflator (125.234) and the 2022 GDP implicit price deflator (118.026).
• Credit amounts per kg of hydrogen based on lifecycle emissions:
  • Not more than 4 kg CO2e/hydrogen kg, but not less than 2.5 kg CO2e/hydrogen kg: 12.7 cents
  • Less than 2.5 kg CO2e/hydrogen kg and not less than 1.5 kg CO2e/hydrogen kg: 15.9 cents
  • Less than 1.5 kg CO2e/hydrogen kg and not less than 0.45 kg CO2e/hydrogen kg: 21.3 cents
  • Less than 0.45 kg CO2e/hydrogen kg: 63.7 cents

Section 45Z: Clean Fuel Production Credit

• Inflation adjustment factor for 2025 transportation fuel sale: 1.0611
  • This factor is calculated using the 2024 GDP implicit price deflator (125.234) and the 2022 GDP implicit price deflator (118.026).
• Credit amount for:
  • non-sustainable aviation fuel (SAF) sold in 2025:
    • base rate – 0.21 cents
    • alternative rate – $1.06
  • SAF sold in 2025:
    • base rate – 0.37 cents
    • alternative rate – $1.86

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