Based on House File 2754 authorized by the Iowa General Assembly in 2006, Iowa has the goal that 25% of all petroleum used in the formulation of gasoline in the state be replaced by biofuels by 2020. Several refundable tax credits were enacted for biofuel retailers to assist in reaching this goal. Currently, Iowa biofuel retailers have four tax credits available: The Ethanol Promotion Tax Credit, the E85 Gasoline Promotion Tax Credit, the E15 Plus Gasoline Promotion Tax Credit, and the Biodiesel Blended Fuel Tax Credit (IDR, 2014).
Through the Ethanol Promotion Tax Credit (EPTC) biofuel retailers receive $0.08 to $0.04 per gallon. EPTC was enacted J
anuary 1, 2009 and replaced the Ethanol Blend Gasoline Tax Credit, which expired December 31, 2008. E85 Gasoline Promotion Tax Credit (E85GC) was enacted on January 1, 2006 and gives a credit of $0.16 per gallon. E85 requires dedicated pumps, and is for flexible fuel vehicles only.
E15 Plus Gasoline Promotion Tax Credit (E15GC) provides a credit to retail dealers who sell blended gasoline with 15% to 69% ethanol (E15 Plus). 2001 model year vehicles and newer have been allowed by the Environmental Protection Agency (EPA) to use E15, which is a blend up with 15% ethanol sold by registered E15 retailers. Blends with more than 15% ethanol or dispensed by nonregi
stered retailers can only be used in flex-fuel vehicles (FFVs) as FFVs can use any gasoline blended with up to 85% ethanol. The tax rate is $0.03 per gallon from September 16th to May 30th, and $0.10 per gallon during June 1 to September 15. According to the IDR (2017), the tax credit of $0.10 per gallon during the summer time is designed to incentivize retailers to take the additional steps required to continue selling E15 through registered pumps year-round. Retailers can only continue to sell registered E15 during these months if they use low volatile gasoline for blending, which is not piped into Iowa.
Biodiesel Blended Fuel Tax Credit (BBFC) started on January 1, 2006. In calendar year 2013 through 2017, the tax credit equals $0.045 per gallon for retailers offering a biodiesel blend with a minimum of 5% biodiesel (B5). The tax credit will be $0.035 per gallon on B5 and $0.055 per gallon on B11, or diesel blended with a minimum of 11% biodiesel for the 2018 through 2024 period.
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