Propane Laws and Incentives in Iowa
The list below contains summaries of all Iowa laws and incentives related to propane.
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
- 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, 452A.41, and 452A.86)
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, solar energy, 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 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 submit a report detailing the use of ethanol and biodiesel blends in state fleet vehicles to the governor and Iowa General Assembly.
(Reference Iowa Code 8A.360, 8A.362, 8A.368, 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A and House File 2128, 2022)
Alternative Fuel Vehicle Conversion Registration
When a motor vehicle is modified to use a different fuel type or more than one type of fuel, the vehicle’s registered owner must notify the county treasurer of the new fuel type or alternative fuel types within 30 days. If the vehicle is able to use a special fuel, the county treasurer will issue a special fuel identification sticker.
(Reference Iowa Code 321.41)
State Incentives
Alternative Fuel Vehicle (AFV) Grants
The Iowa Economic Development Authority (IEDA) provides grants for projects that benefit Iowa ratepayers and support the implementation of the Iowa Energy Plan, including the purchase of AFVs. Eligible applicants include Iowa businesses, colleges and universities, and private and nonprofit organizations. For more information, including eligibility requirements, see the IEDA Iowa Energy Center Grant Program website.
(Reference Iowa Administrative Code 261.404)
Diesel Emission Reduction Project Funding
The Iowa Department of Transportation (Iowa DOT) provides funding for the replacement, retrofit, or conversion of medium- and heavy-duty (MHD) on-road diesel vehicles with new diesel or alternative fuel vehicles. Grants are also available for off-road diesel vehicle replacements and repowers. Grants are available for MHD school buses, transit buses, and trucks. Non-road vehicles and equipment may also be eligible for funding. Eligible applicants include government, nonprofit, and private entities that own or operate diesel fleets and equipment. Additional restrictions apply. This grant program is partially funded by Iowa’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including eligible vehicles, see the IowaDOT Diesel Emission Reduction Act Website.
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.