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Biodiesel tax incentive

By Staff | Jun 19, 2020

A bill heading to Gov. Kim Reynolds would support Iowa’s soybean growers and biodiesel plants while also helping to reduce air pollution. We urge the governor to sign it as soon as it hits her desk.

The measure would extend a fuel tax incentive for diesel sold in Iowa that contains at least 11 percent biodiesel. That tax incentive was put in place in 2015.

Called the Fuel Tax Differential, the incentive is a 3 cents per gallon reduction in the tax on fuel that contains 11 percent or more of biodiesel.

According to the Iowa Biodiesel Board, the tax incentive has led to a threefold increase in the number of retailers selling biodiesel.

About 47 percent of the diesel fuel sold for over the road use in Iowa contains biodiesel at the 11 percent level or higher.

Soybeans are the primary raw material of biodiesel, so a tax incentive that results in more biodiesel being used benefits farmers.

Farmers can sell their soybeans to one of the 11 biodiesel plants in the state. Those plants produced about 345 million gallons of biodiesel in 2019, the most in the nation.

The plants employ Iowans, providing good jobs in rural parts of the state. A study by ABF Economics, cited by the Iowa Biodiesel Board, shows the industry supported 3,875 full-time jobs in 2019 and adds $489 million to the state’s gross domestic product annually.

Those are all impressive numbers.

Any incentive that leads to the sale of more biodiesel helps farmers and workers at the plants that make the fuel. Those farmers and workers in turn support their communities with their spending.

And everyone should remember that biodiesel is a clean-burning fuel made from a renewable resource.

The economic and environmental benefits of biodiesel make it clear that this extension of the tax incentives.

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