Natural Gas Laws and Incentives in Iowa
The list below contains summaries of all Iowa laws and incentives related to natural gas.
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.
Point of Contact
Business Finance Program Coordinator
Iowa Economic Development Authority
Phone: (515) 348-6161
Diesel Emission Reduction Project Funding
The Iowa Department of Transportation (IowaDOT) provides funding for medium- and heavy-duty on-road new diesel, alternative fuel vehicles, or engine repowers and replacements, as well as off-road repowers and replacements. Both government and non-government entities that own and operate diesel fleets and equipment are eligible for funding. Vehicles and equipment that qualify for replacement or repower include:
- Model Year (MY) 2009 or older Class 4-8 school buses, shuttle buses, and transit buses;
- MY 1992-2009 Class 4-7 local freight trucks;
- MY 1992-2009 Class 8 drayage trucks; and
- Freight switchers, ferries and tugs, marine vessel shore power, airport ground equipment, forklifts, and port cargo handling equipment.
Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption
Any motor vehicle equipped with an auxiliary power unit (APU) or other idle reduction technology may exceed the gross, single axle, tandem axle, or bridge formula weight limits by up to 550 pounds (lbs.) to compensate for the weight of the technology. To be eligible for the weight exemption, the vehicle operator must be able to provide written proof or certification of the weight of the APU or idle reduction technology and demonstrate or certify that the technology is functional at all times.
NGVs may exceed the weight limits by an amount equal to the difference of the weight of the natural gas tank and fueling system and the weight of a comparable diesel tank and fueling system. The NGV must not exceed a maximum gross vehicle weight of 82,000 lbs. (Reference Iowa Code 321.463)
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;
- Hydrogen is subject to the excise tax of $0.65 per DGE, measured at 2.49 lbs.; and
- Electricity is 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.
Alternative Fuel Vehicle (AFV) 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)
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 light-duty 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. Vehicles and trucks purchased and directly used for law enforcement and off-road maintenance work are exempt from this requirement. (Reference Iowa Code 8A.362, 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A)
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.