Biofuel Blending Equipment Tax Incentives

A Storage and Blending Equipment Credit is available for the purchase, construction, or installation of qualified equipment used for storing and blending petroleum-based fuel with biodiesel, ethanol, or other biofuel. The equipment must be installed at a fuel terminal, refinery, or biofuel production facility. The tax credit is equal to 10% of the qualified investment for the first $10,000,000 invested, and 5% of the investment in excess of $10,000,000. The credit may be taken in 10 equal annual installments beginning with the year in which the equipment is placed into service. Excess credits may be carried over into subsequent years for a maximum of 14 years after the first installment. To be eligible for the tax credit, the taxpayer must continue to operate the equipment for at least 10 years. The credit expires January 1, 2012.

Biofuel blenders may also be eligible for an income tax deduction based on the accelerated depreciation for storage and blending equipment. This deduction extends over a 10-year period and is equal to 55% of the depreciated value for the first year and 5% of the depreciated value for each of the nine subsequent years that the equipment remains in production.

(Reference Kansas Statutes 79-32,251 through 79-32,255)