Tax Changes for Blenders/Retailers
Changes taking affect January 1, 2009
Retailers continue to remain eligible for the $0.025 per gallon on gallons of E10 sold above and beyond the 60% eligibility threshold through 2008. This credit is claimed on Iowa income tax returns using Form 6478. Effective January 1, 2009, this tax credit is repealed and replaced with a new incentive program known as the Iowa Renewable Fuels Standard.
Other Tax Credits available:
The Ethanol Promotion Tax Credit for Retail Dealers
- The Ethanol Promotion Tax Credit starts calendar year 2009 and ends after calendar year 2020. The incentive each site is eligible for will be directly tied to the preceding IRFS schedule with amounts to be paid only for "pure" ethanol gallons (E100). The law allows "pure" biodiesel gallons (B-100) to count toward achieving the threshold schedule. However, biodiesel gallons are not eligible for these credits; they have their own tax credit. The schedule is based on E-100 plus B-100 divided by total gasoline gallons. The amount of the credit will be determined each year using:
- 6.5 cents per gallon of E100 if retailer meets the biofuel standard threshold percentage
- 4.5 cents per gallon of E100 if retailer is within 1-2% of threshold percentage
- 2.5 cents per gallon of E100 if retailer is within 3-4% of threshold percentage
- 0 cents if more than 4% below the threshold percentage
Is the Calculation Based on Sales at Each Site or Company Wide Sales?
It is based on a company-wide calculation. Each retail dealer has only one biofuel threshold percentage disparity, and the tax credit is calculated on the total ethanol gallonage sold by each location using the same tax credit rate. The retail dealer must simply determine the ethanol gallonage sold at each retail motor fuel site, and multiply it by the applicable tax credit rate determined by the retailer's statewide biofuel threshold percentage disparity to calculate the ethanol promotion tax credit.
E-85 Gasoline Promotion Tax Credit
In addition to the incentives provided above, a retail dealer who sells or dispenses E-85 gasoline is eligible for this new income tax credit. The tax credit started at 25 cents per gallon of E-85 sold for calendar years 2006, 2007, and 2008, and gradually goes down to 1 cent per gallon for calendar year 2020. The retailer can claim this tax credit in addition to the ethanol promotion tax credit. This tax credit applies retroactively to tax years beginning January 1, 2006, and is repealed on January 1, 2021. Example: if retailer sells E85 and also meets the biofuel threshold percentage overall at a site, retailer is eligible for 6.5 cents per gallon of E100 as income tax credit AND 25 cents per gallon income tax credit of E-85 sold. If retailer's tax year does not coincide with calendar year, the calculation is defined in law. Retailer can also carry forward tax credit to following tax year.