Legislative Recaps
2026 FUELIowa recap
FROM: FUELIowa Advocacy Team Partners Marc Beltrame and David Peck, Beltrame Law Firm, PLC
Session Overview
With the Iowa Legislature officially adjourning sine die on the afternoon of Sunday, May 3, 2026, the 2026 legislative session proved to be an extremely active year for tax policy, fuel regulation, tobacco and vapor products, alcohol distribution, SNAP policy, and broader energy and infrastructure legislation impacting FUELIowa members.
Throughout the session, FUELIowa remained actively engaged in legislation involving motor fuel taxation, motor fuel gallons reporting, above ground storage tanks, nicotine and vapor taxation, cigarette taxation, alcohol inventory transfer reform, greenhouse gas liability protections, SNAP purchasing regulations, credit card fees, property tax, and numerous other issues affecting Iowa’s fuel retailers and fuel marketers.
While many major proposals generated significant legislative attention throughout session, the final outcomes for FUELIowa members were ultimately mixed.
Legislative Priorities & Key Outcomes
SSB 3001 — Gas Tax and Property Tax Reform Proposal
FUELIowa Position: Oppose Fuel Tax Increases and Indexing Provisions
Final Status: Failed to Advance in House
One of FUELIowa’s largest legislative priorities during the 2026 session involved opposition to proposed fuel tax increases using an indexing provision included within SSB 3001 and related property tax reform discussions. FUELIowa spent significant time throughout the session engaging legislators and stakeholders regarding concerns surrounding automatic fuel tax increases, affordability impacts on Iowa consumers and businesses alike, and broader transportation funding proposals.
Throughout the session, FUELIowa remained heavily engaged with legislators and stakeholders regarding concerns surrounding automatic fuel tax increases, long-term affordability impacts on Iowa consumers, and broader transportation funding discussions.
Ultimately, the Senate property tax package containing the fuel tax language failed to advance through the House after passage in the Senate, representing a significant victory for Iowa’s fuel industry and consumers alike.
SF 2480 — Cigarette, Alternative Nicotine & Vapor Product Tax Legislation
FUELIowa Position: Undecided / Seek Amendments
Final Status: Passed in Amended Form
SF 2480 represented one of the most significant tobacco and vapor policy debates of the 2026 legislative session. A policy debate which is likely to rise again in 2027. Throughout negotiations, FUELIowa remained heavily engaged regarding concerns surrounding tax rates, floor stock taxes, minimum markup provisions, and broader regulatory impacts on retailers.
While the final legislation ultimately imposed new alternative nicotine (pouch) and vapor product taxes, FUELIowa was successful in staving off a cigarette tax increase while suppressing new tax rates for alternative nicotine and vapor products. Multiple additional nicotine and vapor taxation proposals introduced during session contained significantly more aggressive tax and regulatory structures than the ultimately enacted legislation.
Compared to several alternative tobacco tax proposals introduced during session, the final version of SF 2480 represented a substantially improved outcome for retailers represented by the lowest tax rates in the country on nicotine pouches and vapor products at 5 cents per container of 20 pouches and 5 cents per milliliter of vapor product. No tax increase associated with cigarette’s was passed during the 2026 session.
SF 2451 / HF 2647 — Alcohol Inventory Transfer Legislation
FUELIowa Position: Support
Final Status: Did Not Advance to Final Passage
SF 2451 and HF 2647 sought to allow commonly owned retail establishments operating with a Class E liquor license greater flexibility in transferring spirits inventory between licensed locations under common ownership. The legislation remained a significant FUELIowa priority throughout the 2026 session.
Although the bills ultimately did not reach final passage this year, substantial groundwork was laid with both legislators and regulators regarding the operational challenges facing retailers under Iowa’s current alcohol distribution system.
Curiously, FUELIowa’s greatest opposition came from your supplier members of the Iowa Wholesale Beer Distributor’s Association.
Importantly, FUELIowa was successful in ongoing discussions with the Iowa Department of Revenue and Iowa Alcoholic Beverages Division (ABD) regarding minimum spirits order requirements. As a result of those discussions, the state reduced the minimum spirits order requirement from $1,000 to $500, representing a meaningful operational improvement for retailers. The reduced minimum order requirement is slated to take effect on July 1, 2026. FUELIowa will be partnering with ABD to provide licensees information on the upcoming change in policy.
HF 1050 — Above Ground Storage Tank Assessment Exemption Legislation
FUELIowa Position: Support
Final Status: Did Not Advance
HF 1050, legislation relating to above ground storage tank assessment exemptions, remained a FUELIowa focus throughout the 2026 session but ultimately did not advance in the Senate.
For the second time in three years, the Iowa House passed this legislation with nearly unanimous support. FUELIowa anticipates an Iowa Supreme Court decision to be rendered in the next 30 days on our above ground storage tank taxation issue. Stay tuned.
Biofuels & Renewable Fuels Policy
SF 2493 / HF 2798 — E85 Agricultural Implement Tax Exemption
FUELIowa Position: Engage and Monitor
Final Status: Passed in Negotiated Form
The Legislature considered multiple proposals during the 2026 session involving excise tax exemptions for E85 and high-ethanol fuel used in agricultural implements. These discussions reflected continued legislative interest in expanding ethanol usage and supporting Iowa biofuels markets.
FUELIowa was successful in advocating for fuel marketer protections in the final version of this bill. Agricultural end-users claiming exemption will be required to sign an exemption certificate to be kept on file by a marketer, a process analogous to end-users claiming exemption from state sales tax.
HF 2786 / HSB 688 — Biodiesel Tax Credit & Refund Legislation
FUELIowa Position: Monitor and Engage
Final Status: Mixed Outcomes
FUELIowa remained engaged on multiple biodiesel tax credit and sales/use tax refund proposals throughout the session, including legislation extending repeal dates and modifying refund structures associated with biodiesel production and blended fuel incentives. No extension or modification to Iowa’s retail biodiesel tax credits was agreed upon. The sunset date for Iowa’s biodiesel tax credits remains January 1, 2028.
Fuel & Infrastructure Legislation
SF 2484 — RFIP Funding & Infrastructure Appropriations
FUELIowa Position: Undecided
Final Status: Passed Without Additional RFIP Appropriations
Earlier versions of SF 2484 included additional funding related to the Renewable Fuels Infrastructure Program (RFIP). However, those appropriations were ultimately removed from the final version of the legislation prior to adjournment.
While additional RFIP funding would have been welcomed, the outcome was largely anticipated given the current unobligated balances already available to the RFIP Board for distribution toward qualifying fuel infrastructure and upgrade projects.
As a result, the removal of additional appropriations is not expected to significantly impact near-term RFIP funding availability for retailers seeking infrastructure improvements.
Other Legislation of Interest
HF 2133 — Kratom Regulation Legislation
FUELIowa Position: Monitor / Engage
Final Status: Failed
HF 2133, legislation regulating kratom products, failed to advance during the 2026 legislative session after significant debate among stakeholders regarding product standards, underage use, regulation, and retail impacts.
HSB 690 — “American Beer” Excise Tax Proposal
FUELIowa Position: Support
Final Status: Failed
HSB 690, legislation proposing reductions to excise taxes on beer manufactured in the United States, ultimately failed to advance during the 2026 session as broader alcohol-related policy initiatives stalled throughout the legislative process. Concerns over lost revenues to the state during a difficult budget year were ultimately the undoing of this proposal.
HF 2676 — SNAP Purchasing & Program Changes
FUELIowa Position: Monitor and Engage
Final Status: Passed
HF 2676 included changes relating to SNAP purchasing, nutrition program requirements, and program administration. FUELIowa remained actively engaged regarding retailer compliance obligations, operational impacts, and implementation concerns affecting convenience stores and fuel retailers participating in SNAP programs.
HF 2527 — Greenhouse Gas Liability Protection
FUELIowa Position: Support
Final Status: Passed
HF 2527 provides liability protections to fuel retailers against certain lawsuits relating to greenhouse gas emissions and climate-related claims. The legislation represented an important pro-active legal protection measure for fuel retailers and related businesses facing increasing litigation concerns nationwide.
Major End-of-Session Legislative Issues
In addition to fuel and retail-specific legislation, the final weeks of the 2026 legislative session were dominated by negotiations surrounding property tax reform, state budget agreements, and eminent domain policy related to carbon pipeline projects. These issues consumed significant legislative attention and ultimately drove the Legislature beyond its planned adjournment date before lawmakers officially concluded session on May 3, 2026.
Property Tax Reform
After months of negotiations between the House, Senate, and Governor Reynolds’ office, lawmakers ultimately reached agreement on a comprehensive property tax reform package that included new limitations on local government revenue growth and broader reforms aimed at reducing long-term property tax burdens statewide. The reform package negotiated by the House, Senate, and Governor Reynolds’ office is projected to save Iowa consumers and businesses $4 billion over the next six years.
State Budget Agreement
Legislative leaders also finalized the Fiscal Year 2027 state budget during the closing days of session after extended negotiations between the House and Senate Republican caucuses. Budget discussions were heavily shaped by slowing state revenue projections and broader fiscal concerns following the March Revenue Estimating Conference.
Ultimately, lawmakers approved a $9.65 billion budget for state fiscal year 7. To meet their budget target, lawmakers were forced to tap Iowa’s taxpayer relief fund. The state fiscal year 27 budget represents a 1.43 percent increase over the state fiscal year 26 budget.
Eminent Domain and Pipeline Policy
Eminent domain and carbon pipeline legislation remained one of the most politically sensitive and closely watched issues of the session. Debate surrounding pipeline siting authority, landowner protections, and eminent domain authority continued throughout the year and remained a major point of discussion among legislators and stakeholders during final negotiations. This contentious issue is likely to rise again in 2027.
Conclusion
As the Legislature transitions into the interim period, attention will now quickly shift toward the 2026 election cycle. With Iowa’s Primary elections in the rearview mirror, the November general election will play a significant role in shaping the composition of the Iowa Legislature and the policy priorities heading into the 2027 session.
Many of the issues debated during the 2026 session including fuel taxation, nicotine and vapor regulation, cigarette taxation, alcohol distribution policy, SNAP requirements, and energy infrastructure issues are expected to remain central topics moving forward. Additionally, Iowa’s biofuels tax credit program is set to expire on January 1, 2028, making the 2027 session the final session for modification to Iowa’s biofuels tax credit program.
FUELIowa’s engagement throughout the 2026 legislative session would not have been possible without the continued involvement, responsiveness, and support of its members across the state. Member outreach, operational expertise, testimony, and direct communication with legislators played a critical role in advancing industry priorities and shaping legislative discussions throughout the session.
We sincerely appreciate the time, effort, and collaboration provided by FUELIowa members throughout the legislative session and look forward to continuing this work together during the interim and into the 2027 legislative session. Together, we fuel Iowa.
