S. 173

119 S173 IS: Fueling Alternative Transportation with a Carbon Aviation Tax Act of 2025
 U.S. Senate
 2025-01-21
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  1st Session  S. 173  IN THE SENATE OF THE UNITED STATES   January 21, 2025   Mr. Markey  (for himself,  Mr. Murphy ,  Mr. Merkley ,  Mr. Sanders ,  Ms. Warren , and  Mr. Whitehouse ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to increase excise taxes on fuel used by private jets, and for other purposes.
1.
Short title
This Act may be cited as the   Fueling Alternative Transportation with a Carbon Aviation Tax Act of 2025  .
2.
Increase in excise tax for fuel used by private jets
(a)
In general
(1)
Retail excise tax
 Section 4041(c)  of the Internal Revenue Code of 1986 is amended by striking paragraph (3) and inserting the following:
(3)
Rate of tax
The rate of tax imposed by this subsection shall be—
(A)
with respect to any sale or use for commercial aviation, 4.3 cents per gallon, and
(B)
with respect to any sale or use which is not described in subparagraph (A), an amount equal to the sum of—
(i)
35.9 cents per gallon, plus
(ii)
$1.641 per gallon.
(4)
Inflation adjustment
In the case of any calendar year beginning after 2026, the dollar amount in paragraph (3)(B)(ii) shall be increased by an amount equal to—
(A)
such dollar amount, multiplied by
(B)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting  calendar year 2025  for  calendar year 2016  in subparagraph (A)(ii) thereof.
 .
(2)
Manufacturers excise tax
Section 4081(a)(2) of such Code is amended—
(A)
in subparagraph (C), by striking clause (ii) and inserting the following:
(ii)
in the case of use for aviation not described in clause (i), an amount equal to the sum of—
(I)
35.9 cents per gallon, plus
(II)
$1.641 per gallon.
 , and
(B)
by adding at the end the following:
(E)
Inflation adjustment
In the case of any calendar year beginning after 2026, the dollar amount in subparagraph (C)(ii)(II) shall be increased by an amount equal to—
(i)
such dollar amount, multiplied by
(ii)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting  calendar year 2025  for  calendar year 2016  in subparagraph (A)(ii) thereof.
 .
(3)
Conforming amendments
(A)
Section 4081(d)(2) of such Code is amended by striking  (a)(2)(C)(ii)  and inserting  (a)(2)(C)(ii)(I) .
(B)
Section 6427(l)(4)(B)(ii)(II) of such Code is amended by striking  section 4081(a)(2)(C)(ii)  and inserting  section 4081(a)(2)(C)(ii)(I) .
(C)
Section 9503(c)(5)(B) of such Code is amended by striking  21.8 cents  and inserting  35.9 cents .
(b)
Refund or credit in cases of reasonable cause
 Section 6427  of the Internal Revenue Code of 1986 is amended by inserting after subsection (e) the following new subsection:
(f)
Exception from increase in rate of tax for certain liquids used as fuel in non-Commercial aviation
(1)
Retail excise tax
Except as provided in subsection (k), in the case of any fuel on the sale of which tax was imposed under section 4041(c) for which the rate of tax was determined under paragraph (3)(B) of such section, if the Secretary determines (pursuant to such regulations as are prescribed by the Secretary) that there is reasonable cause that the increase in the rate of tax pursuant to clause (ii) of such paragraph should not apply with respect to such fuel (such as in cases where the fuel was used in an aircraft which was engaged in scientific research, an evacuation from a natural disaster, or assistance in a medical emergency), the Secretary shall pay (without interest) to the ultimate purchaser of such fuel an amount equal to the increase in the amount of the tax imposed on such fuel pursuant to such clause.
(2)
Manufacturers excise tax
Except as provided in subsection (k), in the case of any kerosene on which tax was imposed under section 4081 for which the rate of tax was determined under subsection (a)(2)(C)(ii) of such section, if the Secretary determines (pursuant to such regulations as are prescribed by the Secretary) that there is reasonable cause that the increase in the rate of tax pursuant to subclause (II) of such subsection should not apply with respect to such kerosene (such as in cases where the kerosene was used in an aircraft which was engaged in scientific research, an evacuation from a natural disaster, or assistance in a medical emergency), the Secretary shall pay (without interest) to the ultimate purchaser of such kerosene an amount equal to the increase in the amount of the tax imposed on such kerosene pursuant to such subclause.
(3)
Termination
This subsection shall not apply to any fuel sold or used after January 1, 2028.
 .
(c)
Elimination of exemption from air transportation excise tax
 Section 4261(f)  of the Internal Revenue Code of 1986 is amended to read as follows:
(f)
Exemption for certain uses
(1)
In general
No tax shall be imposed under subsection (a) or (b) on air transportation by helicopter or by fixed-wing aircraft for the purpose of the planting, cultivation, cutting, or transportation of, or caring for, trees.
(2)
Requirement
Paragraph (1) shall apply only if the helicopter or fixed-wing aircraft does not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of  chapter 471  of title 49, United States Code, during such use.
 .
(d)
Effective date
The amendments made by this section shall take effect on January 1, 2026.
3.
Funding to Support Clean Communities Trust Fund
(a)
In general
Subchapter A of  chapter 98  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
9512.
Funding to Support Clean Communities Trust Fund
(a)
Establishment and funding
There is hereby established in the Treasury of the United States a trust fund to be referred to as the ‘Funding to Support Clean Communities Trust Fund’, consisting of such amounts as may be appropriated or credited to such trust fund as provided for in this section and section 9602(b).
(b)
Transfers to Trust Fund
There are hereby appropriated to the Funding to Support Clean Communities Trust Fund amounts equivalent to the taxes received in the Treasury under—
(1)
section 4041(c) to the extent attributable to the rate specified in paragraph (3)(B)(ii) of such section, and
(2)
section 4081 with respect to kerosene to the extent attributable to the rate specified in section 4081(a)(2)(C)(ii)(II).
(c)
Expenditures from Trust Fund
(1)
In general
Subject to paragraph (2), amounts in the Funding to Support Clean Communities Trust Fund shall be available, as provided by appropriation Acts, for making expenditures for grants and other activities—
(A)
authorized under subsections (a) through (c) of section 103 and section 105 of the Clean Air Act ( 42 U.S.C. 7403(a) –(c), 7405), including grants and other activities to—
(i)
deploy, integrate, support, and maintain fenceline air monitoring, screening air monitoring, national air toxics trend stations, and other air toxics and community monitoring,
(ii)
expand the national ambient air quality monitoring network with new multipollutant monitoring stations,
(iii)
replace, repair, operate, and maintain existing monitors, and
(iv)
deploy, integrate, and operate air quality sensors in low-income and disadvantaged communities,
(B)
to expand, connect, replace, repair, operate, and maintain public transit and passenger rail infrastructure or systems that are located 20 miles or less from an airport, and
(C)
to improve public transportation, particularly in disadvantaged communities, including costs associated with efforts to provide more safe, frequent, and reliable bus service.
(2)
Set aside for disadvantaged communities
(A)
In general
For any calendar year, not less than 50 percent of the amounts made available under paragraph (1) shall be designated for expenditures for grants and other activities within disadvantaged communities.
(B)
Prioritization of funds for communities disproportionally impacted by air pollution
With respect to making expenditures for grants and other activities described in paragraph (1) to disadvantaged communities, priority shall be given to communities that are disproportionately impacted by air pollution (as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency).
(d)
Disadvantaged community
For purposes of this section—
(1)
In general
The term  disadvantaged community  means a community with significant representation of low-income communities or socially disadvantaged groups (as defined in section 2501(a) of the Food, Agriculture, Conservation, and Trade Act of 1990 ( 7 U.S.C. 2279(a) )) that experiences or is at risk of experiencing higher or more adverse human health or environmental effects.
(2)
Low-income community
For purposes of paragraph (1), the term  low-income community  means any census block group in which 30 percent or more of the population are individuals with an annual household income equal to, or less than, the greater of—
(A)
an amount equal to 80 percent of the median income of the area in which the household is located, as reported by the Department of Housing and Urban Development, and
(B)
200 percent of the Federal poverty line.
 .
(b)
Conforming amendments to Airport and Airway Trust Fund
 Section 9502(b)(1)  of the Internal Revenue Code of 1986 is amended—
(1)
in subparagraph (A), by inserting  to the extent attributable to the rates specified in subparagraphs (A) and (B)(i) of section 4041(c)(3),  after  (relating to aviation fuels), , and
(2)
in subparagraph (D), by striking  rate specified in  and inserting  rates specified in clauses (i) and (ii)(I) of .
(c)
Clerical amendment
The table of sections for subchapter A of  chapter 98  of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 9512. Funding to Support Clean Communities Trust Fund.
  .
(d)
Effective date
The amendments made by this section shall take effect on January 1, 2026.