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HF 2785

A bill for an act extending the biodiesel blended fuel tax credit.

2025-2026 Regular Session

HF 2785 extends the biodiesel blended fuel tax credit repeal to 2033 and allows dealers with tax years spanning the date to continue claiming the credit under existing rates.

Read first time, referred to Ways and Means.
#biofuels #fueltaxes #taxcredits
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Bill Summary · HF 2785

Summary of HF 2785 (2025-2026) — Iowa Biodiesel Blended Fuel Tax Credit Extension

Purpose and intent

  • HF 2785 extends the repeal date of the biodiesel blended fuel tax credit for retail dealers from January 1, 2028, to January 1, 2033.
  • It ensures availability of the biodiesel blended fuel tax credit for an entire tax year for retail dealers whose tax year ends after the repeal date, by allowing continued access in a following tax year.

Key provisions and changes

  • Section 1: Repeal date extension
    • Repeal of the biodiesel blended fuel tax credit, currently scheduled for January 1, 2028, is extended to January 1, 2033.
  • Section 2: Alignment with repeal extension
    • The related provision (422.33, subsection 11C, paragraph c) is amended to extend the repeal timeline through 2033.
  • Section 3: Tax credit availability and transition rules
    • For retail dealers who claim the biodiesel blended fuel promotion tax credits under current sections (422.11P or 422.33, subsection 11C) and whose tax year ends before December 31, 2027 or 2032 (as amended), the bill allows continued eligibility in the retail dealer’s following tax year.
    • If a dealer’s tax year ends after the repeal date, the credit can be claimed for the remaining period of the dealer’s new tax year up to December 31, 2032, calculated using the same method as under current law and as amended by this Act.

Who is affected

  • Retail dealers selling biodiesel blended motor fuel in Iowa (blend must be at least 5% biodiesel to qualify).
  • Taxpayers claiming the credit against individual and corporate income taxes beginning in tax year 2028 (FY 2029), under the extended repeal framework.

Credit specifics (context from the fiscal note)

  • Current credit rates (and those proposed to continue under extension) are:
    • $0.050 per blended gallon for blends ≥ 11% to < 20% biodiesel
    • $0.070 per gallon for blends ≥ 20% to < 30%
    • $0.100 per gallon for blends ≥ 30%
  • Important: There is no annual cap on the tax credit under the bill.
  • The credit is refundable and can be claimed against individual and corporate income taxes.
  • 100% of refundable credits are assumed to be claimed per the fiscal note.

Fiscal impact and timeline

  • Fiscal note estimates a net General Fund revenue impact starting in FY 2029.
    • 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
  • These estimates are based on projected claims and growth in credits through 2033.
  • Timing: Credits begin to be claimed against corporate and individual income taxes in tax year 2028, with fiscal impacts realized in FY 2029.

Administrative and procedural notes

  • The bill includes explanatory language indicating that the extension does not imply legislative agreement with the explanatory text.
  • The bill was introduced and placed on the Ways and Means calendar, with the fiscal note prepared by the Fiscal Services Division.

Bottom line

HF 2785 extends the biodiesel blended fuel tax credit repeal date by five years (to 2033) and ensures eligibility continuity for dealers whose tax years straddle the extended repeal date, preserving the current credit structure and rates while noting substantial expected revenue reductions to the General Fund beginning in FY 2029.

Compiled from official sources — confirm details with the bill’s official record.

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