Iowa legislature creates preferential tax rate for B11 and higher

In Iowa, the Iowa legislature created a 3-cent per gallon differential tax rate for B11 and higher biodiesel blends in the road funding legislation passed Feb. 24. This provision is expected to boost the availability and sales of cleaner-burning, locally produced biodiesel. The bill was passed on Tuesday by a vote of 28 to 21 in the Iowa Senate, and a vote of 53 to 46 in the Iowa House. It now heads to the governor’s desk to be signed into law.

Under the legislation, diesel fuel will be taxed at a rate of 32.5 cents per gallon. However, if diesel fuel is blended with 11 percent or more of biodiesel, the state excise tax is reduced to only 29.5 cents per gallon. The 3-cent per gallon differential for B11 and higher blends will go into effect on July 1, 2015.