Bills › 91st General Assembly
Modifying the sales or use tax refund for biodiesel production
Sponsored by the Senate Transportation (companion To Hf 2071 By Jones) Committee
Topics:AgricultureTaxes
Where it is now
- Done: IntroducedJanuary 14, 2026
- Done: SubcommitteeFebruary 3, 2026
- Done: Senate committeeFebruary 10, 2026
- Skipped: Passes the SenateContinued as SF 2503
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Became SF 2503 → Its progress continues under the new number. Go to SF 2503 What’s a funnel?
What’s in it
AI summary People who make biodiesel in Iowa would receive a higher tax refund for every gallon they produce. The refund amount would increase from 4 cents to 5 cents per gallon. This change would also extend the program so it lasts until 2031 instead of ending in 2028.1
Read the official explanation
This bill increases the sales or use tax refund available to the producers of biodiesel from 4 cents per gallon to 5 cents per gallon. The amount of the refund is calculated by multiplying the designated rate (currently 4 cents) by the total number of gallons of biodiesel produced by the biodiesel producer in this state. The bill changes the repeal date of the refund from January 1, 2028, to January 1, 2031.
Why it matters. Biodiesel producers in Iowa would receive a larger sales or use tax refund based on the number of gallons they produce in the state. This change also extends the period for which these producers can receive the refund through January 1, 2031.2
Senate subcommittee
Named February 18, 2026. It hasn’t reported yet.
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
Fiscal note
AI summary This bill increases the sales and use tax refund for biodiesel producers from four cents to five cents per gallon produced during calendar year 2026. It is estimated that this change will decrease fiscal year 2027 revenue to the General Fund by $1.7 million and to the SAVE Fund by $0.3 million.4
Read the fiscal note
Description
Senate File 2503 increases the sales and use tax refund available to biodiesel producers from four cents per gallon of biodiesel produced to five cents per gallon for calendar year 2026. The Bill applies retroactively to January 1, 2026.
Background
Under current law, biodiesel producers are eligible to receive a sales and use tax refund of four cents per gallon of biodiesel produced, up to a maximum of 25.0 million gallons per calendar year. This allows for a maximum annual refund of $1.0 million per biodiesel producer.
Assumptions
- There are eight biodiesel producers in the State that receive a sales and use tax refund.
- Future sales and use tax refunds for biodiesel producers are forecasted based on 2024 quarterly refund returns.
- The refund rate change in the Bill will have no impact on the calendar year production schedules of biodiesel producers.
- Biodiesel production is assumed to increase by 3.5% each year.
- A biodiesel producer will not receive a refund on more than 25.0 million gallons of biodiesel produced each calendar year.
- Sales and use tax refunds are claimed in the quarter after purchases are made.
- Refunds prior to July 1, 2026, that are affected by the Bill will impact FY 2027.
- Secure an Advanced Vision for Education (SAVE) refunds are 1.0% of taxable expenditures.
- Sales and use tax refunds do not impact the Local Option Sales Tax (LOST).
Fiscal Impact
Senate File 2503 is estimated to decrease FY 2027 revenue to the General Fund by $1.7 million and to the SAVE Fund by $0.3 million.
Sources
- Iowa Department of Revenue
- Iowa Renewable Fuels Association
- Legislative Services Agency calculations
- Biodiesel Producers, Sales Tax Refunds · May 1, 2026
- Biodiesel Producers, Sales Tax Refunds · April 23, 2026