Ethanol Laws and Incentives in Kansas
The list below contains summaries of all Kansas laws and incentives related to ethanol.
State Incentives
Alternative Fuel Vehicle (AFV) Tax Credit
An income tax credit is available for 40% of the incremental or conversion cost for qualified AFVs, based on gross vehicle weight rating (GVWR) as outlined in the following table:
| GVWR | Tax Credit |
|---|---|
| Less than 10,000 pounds (lbs.) | Up to $2,400 |
| 10,000 to 26,000 lbs. | Up to $4,000 |
| Over 26,000 lbs. | Up to $40,000 |
Alternatively, a tax credit of 5% of the cost of the AFV, up to $750, is available for the purchase of an original equipment manufacturer AFV. Qualified AFVs include vehicles that operate on a combustible liquid derived from grain starch, oil seed, animal fat, other biomass, or produced from a biogas source. Only the first individual to take title of the vehicle may receive this credit. For motor vehicles capable of operating on E85, the individual claiming the credit must provide evidence of purchasing at least 500 gallons of E85 between the time the vehicle was purchased and December 31, of the following calendar year. Excess credits may be carried over for up to three years after the year in which the expenditures were made. The credit is only available to entities with corporate income tax liability. For more information, see the Alternative Fuel Tax Credit website.
(Reference Kansas Statutes 79-32,201)
Alternative Fueling Infrastructure Tax Credit
An income tax credit is available for 40% of the total cost to install alternative fueling infrastructure. Qualified property must be directly related to the delivery of alternative fuel into the fuel tank of an alternative fuel vehicle. The tax credit may not exceed $100,000 per fueling station. Alternative fuels are defined as combustible liquids derived from grain starch, oil seed, animal fat, other biomass, or produced from a biogas source. Excess credits may be carried over for up to three years after the year in which the expenditures were made. The credit is only available to entities with corporate income tax liability. For more information, see the Alternative Fuel Tax Credit website.
(Reference Kansas Statutes 79-32,201)
Biofuel Blending Equipment Tax Exemption
Qualified equipment used for storing and blending petroleum-based fuel with biodiesel, ethanol, or other biofuel is exempt from state property taxes. The exemption begins at the time of installation at a fuel terminal, refinery, or biofuel production plant, and ends 10 taxable years following the year of installation. Equipment used only for denaturing ethyl alcohol is not eligible.
(Reference Kansas Statutes 79-232 and 79-32,251)
Biofuel Production Facility Tax Exemption
Any newly constructed or expanded biomass-to-energy facility is exempt from state property taxes for up to 10 taxable years immediately following the taxable year in which construction or installation is completed. A biomass-to-energy facility includes any industrial process plant that uses biomass to produce at least 500,000 gallons of cellulosic alcohol fuel, liquid or gaseous fuel, or other source of energy in a quantity with energy content at least equal to that of 500,000 gallons of cellulosic alcohol fuel. Expansion of an existing biomass-to-energy facility is defined as expansion of the facility’s production capacity by a minimum of 10%.
(Reference Kansas Statutes 79-229 and 79-32,233)
Cellulosic Ethanol Production Financing
The Kansas Development Finance Authority may issue revenue bonds to cover the costs of construction or expansion of a biomass-to-energy facility. A qualifying biomass-to-energy facility includes any industrial process plant that uses biomass to produce at least 500,000 gallons of cellulosic alcohol fuel, liquid or gaseous fuel, or other source of energy in a quantity with energy content at least equal to that of 500,000 gallons of cellulosic alcohol fuel. Expansion of an existing biomass-to-energy facility is defined as expansion of the facility’s production capacity by a minimum of 10%.
(Reference Kansas Statutes 74-8949b and 79-32,233)
Renewable Fuel Retailer Tax Incentive
A licensed retail motor fuel dealer may receive a quarterly incentive from the Kansas Retail Dealer Incentive Fund for selling and dispensing renewable fuels, including biodiesel. A qualified motor fuel dealer is eligible for up to $0.065 for every gallon of renewable fuel sold and up to $0.03 for every gallon of biodiesel sold, if the required threshold percentage is met. The threshold is determined by calculating the percent of total gasoline sales that are renewable fuel or biodiesel. For renewable fuel, the threshold increased incrementally on an annual basis from 10% in 2009 to 25% beginning on January 1, 2024. For biodiesel, the threshold increases incrementally on an annual basis from 2% in 2009 to 25% in 2025. Renewable fuels are defined as combustible liquids derived from grain starch, oil seed, animal fat, other biomass, or produced from a biogas source.
(Reference Kansas Statutes 79-34,171 through 79-34,176)
Laws and Regulations
Biodiesel and Renewable Fuel Definitions
Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from vegetable oils or animal fats and meets the specifications adopted by rules and regulations of the Kansas Department of Agriculture pursuant to current law. The Kansas specification must meet the ASTM D6751-07 specification for biodiesel fuel (B100) blend stock for distillate fuels but may be more stringent regarding biodiesel quality and usability. Renewable fuels are defined as combustible liquids derived from grain starch, oil seed, animal fats, or other biomass; or produced from a biogas source, including any non-fossilized, decaying, organic matter capable of powering spark ignition machinery.
(Reference Kansas Statutes 79-34,155 and 79-34,170)
Biofuels Use Requirement
State-owned diesel-powered vehicles and equipment must use a biodiesel blend that contains at least 2% biodiesel (B2), where available, as long as the price of the biodiesel blend is not more than $0.10 per gallon as compared to the price of diesel fuel. Individuals operating state-owned motor vehicles must purchase fuel blends containing at least 10% ethanol (E10), as long as these fuel blends are not more than $0.10 per gallon as compared to the price per gallon of regular gasoline fuel.
(Reference Kansas Statutes 75-3744a)
E85 Tax Rate and Definition
The minimum motor vehicle fuel tax rate on E85 is $0.17 per gallon, compared to the conventional motor fuel tax rate of $0.24 per gallon. E85 is defined as an alternative fuel that is a blend of denatured ethanol and hydrocarbon and typically contains 85% ethanol by volume, but must contain at least 70% ethanol by volume, and complies with ASTM Standard D5798-99.
(Reference Kansas Statutes 79-3401 and 79-34,141)
Ethanol Blend Dispenser Requirement
A retail motor fuel dispenser that dispenses fuel containing more than 10% ethanol by volume must be labeled with the capital letter “E” followed by the numerical value representing the volume percentage of ethanol, such as E85, and end with the word “ethanol” as specified in Kansas Department of Agriculture guidelines.
(Reference Kansas Administrative Regulations 99-25-10)
Flexible Fuel Vehicle (FFV) Acquisition Requirements
State agencies must purchase FFVs unless the desired vehicle model is not available with an E85-capable engine or the incremental cost of the FFV exceeds $250. When leasing motor vehicles, state agencies must lease FFVs unless no such vehicles are available for lease. Certain restrictions apply.
(Reference Kansas Statutes 75-4617)
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.