Ethanol Laws and Incentives in Iowa

The list below contains summaries of all Iowa laws and incentives related to ethanol.

State Incentives

Alternative Fuel Production Tax Credits

The High Quality Jobs Program offers state tax incentives to business projects for the production of biomass or alternative fuels. Incentives may include an investment tax credit equal to a percentage of the qualifying investment, amortized over five years; a refund of state sales, service, or use taxes paid to contractors or subcontractors during construction; an increase of the state's refundable research activities credit; and a local property tax exemption of up to 100% of the value added to the property. For more information, refer to the High Quality Jobs Program website. (Reference Iowa Code 15.335 and 422.10)

Point of Contact
Business Finance Program Coordinator
Iowa Economic Development Authority
Phone: (515) 348-6161

Biofuel Infrastructure Grants

The Renewable Fuels Infrastructure Program provides financial assistance to qualified 70%-85% ethanol (E85) or dual 15% ethanol (E15) and biodiesel retailers. Cost-share grants are available to upgrade or install new E85 or dual E15 and biodiesel infrastructure. Three-year cost-share grants are available for up to 50% of the total cost of the total project, up to $30,000. Five-year cost-share grants are available for up to 70% of the total cost of the project, up to $50,000.

Biodiesel distributors may apply for cost-share grants for infrastructure upgrades and installations at biodiesel terminal facilities. Facilities blending or dispensing blends ranging from 2% biodiesel (B2) to 98% biodiesel (B98) are eligible for up to 50% of the total project, up to $50,000. Facilities blending or dispensing B99 or B100 are eligible for up to 50% of the total project, up to $100,000.

The Renewable Fuels Infrastructure Board receives administrative support from staff within the Iowa Department of Agriculture and Land Stewardship and has the authority to determine the eligibility of applicants. For more information, refer to the Renewable Fuels Infrastructure Program website.

(Reference Iowa Code 159A.13-159A.15)

Point of Contact
Paul Ovrom
Marketing and Renewable Fuels Program
Iowa Department of Agriculture and Land Stewardship
Phone: (515) 242-6239
paul.ovrom@iowaagriculture.gov
https://www.iowaagriculture.gov/agMarketing/IRFIP.asp

Diesel Emission Reduction Project Funding

The Iowa Department of Transportation (IowaDOT) provides funding for light-duty zero-emission fueling infrastructure. Funding is available for Level 2 and direct current fast charging (DCFC) stations located at public places, workplaces, and multi-unit dwellings. Funding is also available for public light-duty hydrogen refueling stations. This grant program is funded by Iowa’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including how to apply, see the IowaDOT Volkswagen Clean Air Act Partial Settlements website.

E85 Retailer Tax Credit

Retail stations dispensing gasoline fuel blends of E85 for use in motor vehicles may be eligible for a tax credit in the amount of $0.16 per gallon sold. The tax credit expires after December 31, 2027. Eligible taxpayers may also claim the mid-level ethanol blend retailer tax credit for the same tax year.

(Reference Iowa Code 422.11O)

Point of Contact
Anthony Girardi
Public Service Manager 2, Research and Policy
Iowa Department of Revenue
Phone: (515) 240-8417
anthony.girardi@iowa.gov

Mid-Level Ethanol Blend Retailer Tax Credit

Retail stations dispensing mid-level blends of ethanol, between 15% (E15) and 69% (E69), for use in motor vehicles may be eligible for a tax credit. Credit amounts vary by date. The tax credit expires December 31, 2024.

(Reference Iowa Code 214A.1 and 422.11Y)

Point of Contact
Anthony Girardi
Public Service Manager 2, Research and Policy
Iowa Department of Revenue
Phone: (515) 240-8417
anthony.girardi@iowa.gov

Laws and Regulations

Alternative Fuel Tax

Alternative fuels used as vehicle fuel are taxed as follows:

  • Compressed natural gas is subject to the state fuel excise tax of $0.31 per gasoline gallon equivalent, measured at 5.66 pounds (lbs.) or 126.67 cubic feet at a base temperature of 60 degrees Fahrenheit and a pressure of 14.73 lbs. per square inch;
  • Liquefied natural gas is subject to the excise tax of $0.325 per diesel gallon equivalent (DGE), measured at 6.06 lbs.;
  • Propane is subject to the excise tax of $0.30 per gallon;
  • E85 is subject to the excise tax of $0.290 per gallon;
  • B20 is subject to the excises tax of $0.295 per gallon;
  • B100 is subject to the excise tax of $0.325 per gallon;
  • Hydrogen is subject to the excise tax of $0.65 per DGE, measured at 2.49 lbs.; and
  • Effective July 1, 2023, electricity will be subject to the excise tax of $0.026 per kilowatt-hour of fuel delivered or placed into a battery or other energy storage device of an electric motor vehicle at any location in Iowa other than a residence.

(Reference Iowa Code 452A.2, 452A.3, and 452A.86)

Alternative Fuel Vehicle (AFV) Demonstration Grant Authorization

The Iowa Department of Natural Resources (Department) may award demonstration grants to individuals who purchase vehicles that operate on alternative fuels, including but not limited to E85, biodiesel, compressed natural gas, electricity, solar energy, or hydrogen. Individuals may use the grants to conduct research connected with the fuel or vehicle. Grant funding to purchase the vehicle is available if the Department retains the title of the vehicle, the vehicle is used for research, and the proceeds from the eventual sale of the vehicle are used for additional research. Grants are subject to funding availability. (Reference Iowa Code 214A.19)

Alternative Fuel Vehicle Acquisition Requirements

At least 10% of new vehicles purchased by institutions under the control of the state fleet director, including the Iowa Department of Transportation, Board of Directors of Community Colleges, Board of Regents, Commission for the Blind, and Department of Corrections must be capable of operating on alternative fuels. Alternative fuels include E85, B20, natural gas, propane, and electricity. Vehicles and trucks purchased and directly used for law enforcement and off-road maintenance work are exempt from this requirement.

The state fleet must fuel diesel vehicles with biodiesel blends between 2% and 99%, and gasoline vehicles with ethanol blends between 15% and 85%. This requirement does not apply if such blends are not approved by the U.S. Environmental Protection Agency or the vehicle manufacturer. Additional exemptions apply. Vehicles that use the biodiesel and ethanol blends must display a brightly colored, highly visible renewable fuel sticker. Beginning July 1, 2023, and annually thereafter, the Iowa Department of Administrative Services must publish a report detailing the use of ethanol and biodiesel blends in state fleet vehicles.

(Reference Iowa Code 89A.360, 8A.362, 8A.368, 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A and House File 2128, 2022)

Biofuel Quality Program

The Iowa Department of Agriculture and Land Stewardship must establish and administer programs to audit motor fuel facilities, including biofuel processing and production plants, to screen and test motor fuel, including renewable fuel, and to inspect motor fuel sold by dealers, including retail motor fuel dealers. Biofuels include ethanol, biobutanol, and biodiesel. Renewable fuel is defined as a combustible liquid derived from biomass or produced from a biogas source, such as biofuel and biofuel blended with gasoline. (Reference Iowa Code 214A.1 and 214A.2C)

E85 Fuel Exclusivity Contract Regulations

Any motor fuel franchisor must provide for the delivery of E85 as requested by the motor fuel dealer or allow the franchisee to purchase E85 from another source. (Reference Iowa Code 323A)

Ethanol Blend Dispenser Requirement

An ethanol retailer selling a blend of at least 9% ethanol by volume must use gasoline storage and dispensing infrastructure that the Iowa Department of Natural Resources and state fire marshal have determined is compatible with the ethanol blend being dispensed. Exceptions may apply.

A gasoline retailer that replaces or converts gasoline storage and dispensing infrastructure to store and dispense a gasoline blend of 15% ethanol by volume (E15) or higher must guarantee the infrastructure is also capable of storing and dispensing E85.

(Reference Iowa Code 455G.31 and Iowa House File 2128, 2022)

Renewable Fuel Labeling Requirement

Biodiesel, biobutanol, and ethanol blend dispensers must be affixed with decals identifying the type of fuel blend. If fuel blends containing more than 10% ethanol are being dispensed, the decal must include the statement: "For Flexible Fuel Vehicles Only." The Iowa Department of Agriculture and Land Stewardship (Department) may approve applications to place a decal in a special location on a pump with special lettering or colors that are clear and conspicuous to the consumer. (Reference Iowa Code 214A.16)

Retail E15 Access Requirements

Beginning January 1, 2026, retail gasoline fueling stations must advertise and sell E15 from at least one gasoline dispenser. The Iowa Department of Agriculture and Land Stewardship may refuse to renew, suspend, or revoke retail fuel licenses for failure to comply with access requirements. Additional requirements and exemptions may apply.

(Reference Iowa House File 2128, 2022 and Iowa Code 214A.31-214A.37)

More Laws and Incentives

To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.