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HB 2161

Providing an income tax credit for the sale and distribution of biodiesel and renewable diesel blends for motor vehicle fuels.

2025-2026 Regular Session

Kansas allows a temporary 0.05/gal income tax credit (up to 5 million/year) for biodiesel/renewable diesel blends sold in-state 2026–2031.

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Bill Summary · HB 2161

Summary — HB 2161 (Kansas version): Income tax credit for biodiesel and renewable diesel blends

Main purpose
HB 2161 creates a temporary, capped income tax credit to encourage retail sale and direct distribution of biodiesel and renewable diesel blends for motor vehicle use in Kansas by subsidizing sales at the point of retail or direct-to-final-user distribution.

Key provisions

  • Tax credit available for taxable years 2026 through 2031.
  • Credit amount: $0.05 per gallon of qualifying biodiesel blend or renewable diesel blend sold by:
    • a retail dealer at metered pumps at a retail service station in Kansas, or
    • a distributor that sells the blend directly to a final user located in Kansas.
  • Annual statewide cap: $5,000,000 total in credits per tax year.
  • Credits are nonrefundable but may be carried forward up to five taxable years.
  • Definitions provided (summary below) to determine qualifying fuels and sellers.

Eligibility & definitions (selected highlights)

  • “Biodiesel blend”: diesel fuel blended with at least 10% biodiesel (B10 or higher) for on‑road or off‑road vehicle use (including farm tractors and trains).
  • “Biodiesel fuel”: renewable, biodegradable mono‑alkyl ester from plant oils or animal fats meeting ASTM D6751; explicit exclusion of palm oil–derived biodiesel unless the palm oil is contained in U.S.-collected waste oil/grease.
  • “Renewable diesel”: biomass‑derived hydrocarbon fuel meeting ASTM D975 or D396; co‑processed fuels excluded.
  • “Renewable diesel blend”: at least 10% renewable diesel.
  • “Distributor” and “Retail dealer” are defined by activity and place of business in the state.

Fiscal impact (per Fiscal Note, Kansas Division of the Budget)

  • If fully utilized, the credit would reduce State General Fund receipts by up to $5.0 million per tax year beginning tax year 2026 (FY2027).
  • Implementation (FY2026) programming and administrative costs estimated at $212,981 SGF.
  • One new Customer Service Representative (1.00 FTE) estimated, with ongoing salary/benefits of $72,182 SGF in FY2027.
  • The Department of Revenue lacks detailed retail sales data for qualifying fuels, so actual revenue loss is uncertain.

Procedural status & sponsors

  • Introduced in Kansas on January 28, 2025 (requested by Gary Reser on behalf of the Kansas Soybean Association) and referred to the House Committee on Agriculture and Natural Resources.
  • Note: multiple different bills in other states share the number “HB 2161” (Arizona, Illinois) with unrelated subjects; this summary addresses the Kansas income tax credit bill described above.

Effects & considerations

  • Intended to incentivize increased retail availability and use of biodiesel/renewable diesel blends, supporting producers and fuel retailers (including farm and rail fuel markets).
  • Budgetary impact is capped annually but uncertain in practice due to limited sales data.
  • Administrative costs and modest staffing needs are required for program implementation and taxpayer assistance.

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

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