Bills › 91st General Assembly
Extending the biodiesel blended fuel tax credit
Topics:AgricultureTaxesTax credits & incentives
Same legislation: HF 2785
Where it is now
- Done: IntroducedFebruary 5, 2026
- Done: SubcommitteeFebruary 5, 2026
- Done: House committeeApril 21, 2026
- Skipped: Passes the HouseContinued as HF 2785
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 2785 → Its progress continues under the new number. Go to HF 2785 What’s a funnel?
What’s in it
AI summary Retailers who sell biodiesel blended fuel can continue to receive a tax credit for five more years. Instead of ending in 2028, this tax break would now last until 2033. The change also makes sure businesses get the full credit even if their specific tax year doesn't match the exact 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.
House subcommittee
Named February 5, 2026. 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
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 2033.3
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
- Biodiesel Blended Fuel Tax Credit Extension · April 22, 2026 · $30.2M
Iowa Code it changes
Lobbying
4 for · 0 against · 8 undecided · Who →
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91st General Assembly