Iowa enacts biodiesel tax credit

June 1, 2006
Iowa lawmakers have approved renewable fuels and infrastructure bills that provide for point-of-sale retailers to receive a three cent income tax credit on each gallon of a two percent biodiesel (B2) blend or higher, according to information from the National Biodiesel Board (NBB).

Iowa lawmakers have approved renewable fuels and infrastructure bills that provide for point-of-sale retailers to receive a three cent income tax credit on each gallon of a two percent biodiesel (B2) blend or higher, according to information from the National Biodiesel Board (NBB).

To qualify, at least half of the distributor or retailer's diesel sales must be B2 or higher blend levels. Another bill establishes a renewable fuels standard, saying sales of ethanol or biodiesel must equal 25 percent of a retailers fuel sales by 2020. There are exceptions for small fuel retailers.

NBB also said that other states this year have enacted legislation that will significantly impact biodiesel use:

•New York passed a residential bioheat credit that takes effect in July. The state income tax incentive allows homeowners to receive one cent per percentage of biodiesel blended into heating oil, not to exceed 20 cents a gallon.

• Washington signed into law a two percent biodiesel volumetric requirement. The requirement goes into effect December 1, 2008, or when feedstock grown in the state can meet the two percent requirement, whichever comes first.

•Colorado, Arizona, Hawaii, and Maryland added requirements to the books for state fleets to use or give preference to biodiesel blends when available.

•Kansas will award qualified biodiesel fuel producers with a 30 cent per gallon incentive for each gallon they sell, beginning April 1, 2007.

•Arkansas provides for a 50 cent excise tax credit on B100 gallons used for blending, limited to the first 2 percent of total gallons of biodiesel blended.

•California Gov Arnold Schwarzenegger issued an executive order establishing a target of 20 percent renewable fuel use in the state by 2010.

•Indiana's law provides extension of tax credits for production, blending, and retail sales.

•Virginia passed a biofuels production fund and grant incentive program.

As a whole, bills have also included point of taxation clarification, authorization of studies, bills related to schools and buses, and biodiesel promotion. Specifically, bills have provided for public lands for oilseed production, conversion allowances, and an education fund, according to the NBB.