Refundable Clean Heating Fuel Tax Credit (Personal)

The state of New York began offering a personal income tax credit for biodiesel purchases used for residential space heating and water heating beginning in 2006. The original credit was authorized for only one year from July 1, 2006 to June 30, 2007. However, in 2008 the law was amended to reinstate the credit for purchases made between January 1, 2008 and December 31, 2011. The credit is equal to one cent for each percent of biodiesel per gallon of bioheating fuel purchased before January 1, 2026. It may not exceed 20 cents per gallon. Eligible taxpayers are defined as individuals; members of a partnership or an LLC treated as a partnership for tax purposes; shareholders in New York S Corporations; and beneficiaries of an estate or trust.

The value of the tax credit is $0.01/gallon for each percent of biodiesel blended with conventional home heating oil, up to a maximum of $0.20/ gallon. In other words, the purchaser of a mixture of 10% biodiesel and 90% conventional heating oil is entitled to a tax credit of $0.10/gallon. However, after January 1, 2017, the credit will not apply to fuel that is less than 6% biodiesel per gallon. Biodiesel is defined to include certain fuels created from both animal fats and vegetable oils. If a taxpayer's allowable credit exceeds their tax liability for a given year, the remaining credit is refunded rather than carried over to a subsequent tax year.

In order to claim the tax credit personal income taxpayers must complete Form IT-241. Interested corporations must complete Form CT-241. Both forms are available on the New York State Department of Taxation and Finance web site.