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Excise Tax Rates, Credits, Incentives

2019 Motor Fuel Excise Tax Rates and Income Tax Credit Programs

State Excise Tax Rates:

Fuel Type Description

Fuel Tax Rates through June 30, 2020

Gasoline*

$0.305/gal

Alcohol*

$0.29/gal

Ethanol Blended Gasoline

$0.29/gal

E85

$0.29/gal

Diesel (includes B10 and lower blends)*

$0.325/gal

Biodiesel B11 or Higher*

$0.295/gal

Aviation Gasoline

$.080/gal

Aviation Jet

$.050/gal

Liquefied Petroleum Gas (LPG)

$0.300/ gal

Liquefied Natural Gas (LNG)

$0.325/gal

Compressed Natural Gas (CNG)

$0.310/gal

*Excise tax rate adjustments are made beginning July 1 of each calendar year.

Federal Excise Tax Rates:

Fuel Type Description

Fuel Type Rates through June 30, 2019

Gasoline*

$0.184/gal

Ethanol (For use in blending with gasoline)

$0.184/gal

Aviation Gasoline

$0.194/gal

Diesel Fuel

$0.244/gal

Biodiesel (For use in blending with gasoline)

$0.244/gal

Kerosene

$0.244/gal

Liquefied Petroleum Gas (LPG) (Gas Gallon Equivalent)*

$.183/gal

Iowa Environmental Protection Charge Fee

Iowa petroleum marketers ceased collection of the environmental protection charge beginning January 1, 2017.

Ethanol Promotion Tax Credit (RFS Schedule)

Under the RFS schedule, retailers must maintain certain levels of renewable fuel sales to qualify for these incentives.  The state creates two tiers for retailers of gasoline, those selling more 200,000 gallons of gasoline annually and those selling 200,000 gallons or less annually. For example, in the 2018 calendar year, retailers must have replaced 23% (19% for retailers selling less than 200,000 gallons of gasoline annually) of their gasoline sales with renewable fuels to qualify for the top incentive of 8 cpg on each gallon of E-100 sold. If a retailer comes within two percent of reaching that goal, they would qualify for 6 cpg, and if they are within four percent of the goal, they would qualify for 4 cpg.  

Year

More than 200,000 Gas Gallons Annually

Less than 200,000 Gas Gallons Annually

2017

21%

17%

2018

23%

19%

2019

25%

21%

2020

25%

25%

 

If a retailer comes within two percent of reaching that goal, they would qualify for 6 cpg, and if they are within four percent of the goal, they would qualify for 4 cpg.

The retail dealer determines the biofuel percentage by summing pure ethanol and pure biodiesel gallons sold during the calendar year and dividing that sum by the total gasoline gallons sold during the calendar year. While the biodiesel gallons are included in the computation of the biofuel percentage to determine if the threshold is met, only the pure ethanol gallons sold are used in determining the amount of the credit. Retail dealers may elect to compute the tax credit on a site-by-site or company-wide basis. All sales to end-users are eligible for the credit, including tank wagon sales and transport deliveries, and the credit may be claimed on Iowa Form 137.

E-85 Promotion Tax Credit

Prior to CY 2011, the per gallon incentive for selling E-85 was 20 cpg and beginning January 1, 2011, it was cut in half to 10 cpg. During the 2011 legislative session, the credit was increased to 16 cpg effective January 1, 2012, and this tax credit is repealed January 1, 2025. Iowa defines E-85 as containing between 70%-85% by volume ethanol. All sales to end-users are eligible for the credit, including tank wagon sales and transport deliveries, and the credit may be claimed on Iowa Form 135.

E-15 Plus Tax Credit

In 2011, the legislature created a new E-15 tax credit that is similar in application to the current E-85 promotion tax credit. The E-15 plus tax credit is available to retailers who sell E-15 to E69 but the tax credit does not include E-85. The tax credit applies as follows: Beginning in 2014, the tax credit rate is 3 cpg sold throughout the year, except June 1 through September 15, when the rate increases to 10 cpg. This credit can be claimed in addition to the incentives received under the state of Iowa RFS (Ethanol Promotion Tax Credit) and is repealed on January 1, 2025. All sales to end-users are eligible for the credit, including tank wagon sales and transport deliveries, and the credit may be claimed on Iowa Form 138.

Biodiesel Retail Tax Credit

Beginning January 1, 2018, a retail incentive was placed on B11+ blends of 5.5 cpg. Also on this date, B5-B10 blends will see their retail credit reduced from 4.5 cpg to 3.5 cpg.  All sales to end-users are eligible for the credit, including tank wagon sales and transport deliveries, and the credit may be claimed on Iowa Form 8864.

Renewable Fuel Infrastructure Grant Program

Previously, $3 million per year was allocated from the Statutory Allocations Fund to the Renewable Fuels Infrastructure Fund (RFIF). The RFIF is a cost-share grant program that assists retailers in installing and upgrading equipment to dispense renewable fuels, including ethanol and biodiesel. During the 2018 legislative session, state lawmakers provided one-time funding for the program through the Rural Infrastructure Investment Fund. Future funding of Iowa’s Renewable Fuel Infrastructure Grant Program will once again be a priority for FUELIowa during the 2019 legislative session. The grant program’s current balance of funds is approximately $2M. 

To learn about upcoming deadlines for applications, click here.







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