• Iowa Extends and Increases Tax Credits and Refunds for Renewable Fuel Sales and Production
  • June 2, 2014
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Iowa Governor Terry Branstad recently signed legislation (S.F. 2344) that extends and increases the tax credits offered to certain Iowa renewable fuel retailers and extends the tax refunds offered to certain Iowa biodiesel producers.

    E-15 Plus Gasoline Promotion Tax Credit

    Subject to certain requirements under current law, the E-15 Plus Gasoline Promotion Tax Credit is available to a retail dealer who sells and dispenses qualifying ethanol blended gasoline through a motor fuel pump located at the retail dealer’s retail motor fuel site. Under the prior law, the current tax credit of three cents per gallon of qualifying ethanol blended gasoline sold and dispensed by qualifying retailer dealers during the calendar year 2014 would be reduced to two cents per gallon for calendar years 2015, 2016 and 2017.

    Under S.F. 2344, which applies retroactively to tax years beginning on and after Jan. 1, 2014, the three cent tax credit will be maintained during most of each calendar year and will be increased to 10 cents per gallon for qualifying ethanol blended gasoline sold and dispensed between June 1 and Sept. 15 of each calendar year. This E-15 Plus Gasoline Promotion Tax Credit is still set to expire on Jan. 1, 2018.

    Biodiesel Production Refund

    Subject to certain requirements, under current law, a manufacturer of biodiesel used in biodiesel blended fuel may be eligible to receive a sales and use tax refund. Under current law, the tax refund is equal to two cents per gallon of biodiesel produced by the biodiesel producer in Iowa during the 2014 calendar year, subject to certain limitations. This tax refund was set to expire on Jan. 1, 2015.

    S.F. 2344 extends the Biodiesel Production Refund through calendar year 2017 at the current two cents per gallon rate.

    Iowa renewable fuels industry

    S.F. 2344 is an example of how states are using their taxing authority to promote the sale and production of renewable fuels.

    According to a press release by the Iowa Renewable Fuels Association (IRFA), the State of Iowa is the leader in renewable fuels production with 12 biodiesel facilities capable of producing almost 315 million gallons annually and 42 ethanol refineries capable of producing in excess of 3.8 billion gallons annually.

    IRFA Policy Director Grant Menke stated in the press release that “S.F. 2344 will help preserve Iowa biodiesel jobs while also expanding Iowa motorists’ access to cleaner-burning, more locally-produced E15 [gasoline], and I applaud Iowa’s elected leaders for standing united with Iowa’s renewable fuels community.”