Cellulosic Ethanol Production Facility Tax Incentives

A Biomass-to-Energy Plant Tax Credit is available for the construction or expansion of a biomass-to-energy facility. A qualified biomass-to-energy facility includes any industrial process plant that produces at least 500,000 gallons of cellulosic alcohol fuel, liquid or gaseous fuel, or other source of energy in a quantity having a British thermal unit (BTU) value equal to, or greater than, 500,000 gallons of cellulosic alcohol fuel. Expansion of an existing biomass-to-energy facility means expansion of the facility’s production capacity by a minimum of 10%. The tax credit is equal to 10% of the qualified investment on the first $250,000,000 invested, and 5% of the investment in excess of $250,000,000. The credit may be taken in 10 equal annual installments beginning with the year in which the new or expanded facility is placed into service. Excess credits may be carried over into subsequent years for a maximum of 14 years after the first installment. The credit expires January 1, 2011. Individuals must apply to the Kansas Department of Revenue before making a qualified investment.

An income tax deduction based on the amortizable costs of a new or expanded biomass-to-energy facility over 10 years is also available. This amount of the deduction is equal to 55% of the amortizable costs of the new or existing facility for the first taxable year in which the facility is in production and 5% of the amortizable costs for each of the next nine taxable years.

(Reference Kansas Statutes 79-32,233 through 79-32,23)