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Bills › 91st General Assembly

HF 2785Died when the session ended · May 2, 2026

Extending the biodiesel blended fuel tax credit

Sponsored by the House Ways and Means Committee

Topics:AgricultureTaxesTax credits & incentives

Same legislation: HSB 688

Write your legislators about it

Also covers HSB 688.

Official bill pageLobbyist declarationsOne-pager to print

Where it is now

  1. Done: IntroducedFebruary 5, 2026
  2. Done: SubcommitteeFebruary 5, 2026
  3. Done: House committeeApril 21, 2026
  4. Done: Passes the HouseMay 2, 202684–1
  5. Stopped: Senate committeeDied when the General Assembly ended
  6. Next: Passes the Senate
  7. Next: To the Governor
  8. Next: Signed into law

Died when the session ended The 2026 session adjourned on May 3, 2026, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?

What’s in it

AI summary Retailers who sell biodiesel blends can continue to receive a tax credit for five more years. Instead of the credit ending in 2028, it would now last until 2033. This change also makes sure businesses can use the credit for their entire tax year even if their schedule doesn't match the official end date.1

Read the official explanation

This bill extends the repeal of the biodiesel blended fuel tax credit for retail dealers from January 1, 2028, to January 1, 2033, for purposes of the individual and corporate income taxes. The bill amends the Iowa Acts to ensure the availability of the biodiesel blended fuel tax credit for an entire tax year for those retail dealers whose tax year does not align with the repeal date of the tax credit.

Why it matters. Retail fuel dealers would continue to be eligible for the biodiesel blended fuel tax credit for individual and corporate income taxes through January 1, 2033. This change is estimated to decrease General Fund revenues by $4.8 million in fiscal year 2029, $26.2 million in fiscal year 2030, $28.5 million in fiscal year 2031, $29.5 million in fiscal year 2032, and $30.2 million in fiscal year 2033.2

Full bill text3

House subcommittee

Named February 5, 2026 (as HSB 688). On February 17, 2026 it recommended passage.

Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part

1 written public comment to its subcommittee: February 17, 2026 (1) · on the Legislature’s site

Fiscal note

Less revenue: up to $30.2M Compare with other bills

AI summary This bill extends the expiration date of the biodiesel blended fuel tax credit for retail dealers until January 1, 2033. It is estimated to decrease General Fund revenues by $4.8 million in fiscal year 2029, $26.2 million in fiscal year 2030, $28.5 million in fiscal year 2031, $29.5 million in fiscal year 2032, and $30.2 million in fiscal year 2033.4

Read the fiscal note

Description

House File 2785 extends the repeal of the Biodiesel Blended Fuel Tax Credit for retail dealers from January 1, 2028, to January 1, 2033, and allows retail dealers whose tax year does not align with the repeal date to access the tax credit.

Background

The Biodiesel Blended Fuel Tax Credit was created in 2006 Iowa Acts, chapter 1142 (Regulation of Renewable Fuels and Energy Act), and is available to retail dealers selling biodiesel blended motor fuel in Iowa. To qualify for the credit, the blend that is sold must be at least 5.0% biodiesel. The tax credit is currently equal to $0.050 per blended gallon for blends of at least 11.0% biodiesel but less than 20.0%, $0.070 for blends of at least 20.0% but less than 30.0%, and $0.100 for blends of at least 30.0%. According to the March 2026 Contingent Liabilities Report from the Iowa Department of Revenue (IDR), approximately $27.1 million was claimed from the tax credit against individual and corporate income taxes in FY 2025.

Assumptions

  • According to the IDR, the estimated Biodiesel Blended Fuel Tax Credit claims by tax year are as follows:
  • TY 2023 = $21.6 million
  • TY 2024 = $26.0 million
  • TY 2025 = $26.4 million
  • TY 2026 = $27.3 million
  • TY 2027 = $27.7 million
  • Tax credit claims will increase at a rate of 2.1% each tax year from TY 2028 through TY 2033.
  • Tax credit claims from the Bill will begin to be claimed against corporate and individual income taxes beginning in TY 2028, with initial fiscal impacts in FY 2029.
  • There is no annual tax credit cap due to the Bill.
  • Tax credit rates under the Bill are equal to the tax credit rates under current law.
  • According to the IDR, it is assumed that 100.0% of refundable tax credits from the Bill will be claimed, with the timing of claims indicated below:
  • Year 0 = 0.0%
  • Year 1 = 17.0%
  • Year 2 = 75.3%
  • Year 3 = 6.0%
  • Year 4 = 1.7%
  • The refundable tax credit will have no impact on the income surtax for schools.

Fiscal Impact

House File 2785 is estimated to decrease General Fund revenues by the following amounts:

  • FY 2029 = $4.8 million
  • FY 2030 = $26.2 million
  • FY 2031 = $28.5 million
  • FY 2032 = $29.5 million
  • FY 2033 = $30.2 million

Sources

  • Iowa Department of Revenue
  • Legislative Services Agency analysis

Reading a fiscal note5

Iowa Code it changes

Amends§422.11P§422.33

How the Code works6

Lobbying

4 for · 0 against · 8 undecided · Who →

Family tree

Study bill

HSB 688Renumbered

91st General Assembly

HF 2785Passed a chamberfrom HSB 688