The differential reduces the tax on biodiesel by about 3 cents per gallon
By Diego Flammini
Iowa legislators have voted in favor of extending a fuel tax incentive for biodiesel.
The Fuel Tax Differential, which reduces per-gallon taxes on state fuel, was set to expire on June 30, but state lawmakers approved a six-year extension for the program.
The differential reduces taxes on the cost of blends of 11 percent biodiesel (B11) and ethanol by about 3 cents per gallon.
As of Jan. 1, biodiesel blends of B10 or lower were taxed at 33 cents per gallon. Blends of B11 or higher were taxed at about 30 cents per gallon.
Industry representatives are pleased to see Iowa’s policy-makers support the biodiesel sector during this critical time.
“This is a top priority for the Iowa Soybean Association (ISA) going into the legislative session this year,” Michael Dolch, public affairs director with ISA, told Farms.com. “It helps with the state’s economy, it helps with the economics of rural communities, and this is a big domestic market for our soybean farmers.”
The fuel tax policy was originally passed in 2015 to help increase the availability and sales of cleaner, locally produced biodiesel.
A 2018 report from the state Department of Revenue shows the differential is achieving its intended success.
771 retailers provided biodiesel to consumers, which is almost three times the number of retailers in 2010. And almost 50 per cent of on-road diesel gallons in the state have B11 or higher, the report says.
Gov. Kim Reynolds must sign the bill before it comes into effect.
All indications are that she will authorize it, Dolch said.
“We fully expect, based on conversations we’ve had, that she will sign the bill,” he said. “It could be as early as next week.”