Bill
HB 2736
The bill exempts marine fuel (fuel for propulsion of watercraft) from Illinois motor fuel tax starting July 1, 2025.
Status snapshot
- Bill number: HB 2736
- Subject: Motor Fuel Tax Law — exemption for marine fuel
- Jurisdiction (text provided): Illinois Motor Fuel Tax Law (35 ILCS 505)
- Key dates in document: introduced February 2025; bill text provides that the exemption takes effect on and after July 1, 2025. Legislative actions in the record show House passage in March 2025 and transmission to the Senate; currently indicated as Rule 19(a) / re‑referred to Rules Committee.
Purpose and intent
- The bill amends the Illinois Motor Fuel Tax Law to create a statutory exemption under the motor fuel tax for “marine fuel” — defined as motor fuel specially formulated to be used in the propulsion of watercraft — so that such fuel is not subject to the tax beginning July 1, 2025.
Key provisions
- Adds a new definition (35 ILCS 505/1.30):
- “Marine fuel” means motor fuel specially formulated to be used in the propulsion of watercraft.
- Amends Section 2 of the Motor Fuel Tax Law (35 ILCS 505/2) to add subsection (d‑5):
- On and after July 1, 2025, marine fuel, as defined, is exempt from the tax imposed under the Act.
- The rest of the Motor Fuel Tax Law (tax rates, CPI adjustments, separate provisions for diesel, compressed natural gas, etc.) remains in place; the exemption removes marine fuel from those taxed products.
Who is affected
- Consumers: Operators of recreational and other watercraft who purchase marine‑specific fuel — likely lower fuel costs for boat owners/operators after the exemption takes effect.
- Suppliers/retailers: Marinas, fuel distributors and retailers selling marine fuel will no longer collect or remit motor fuel tax on qualifying marine fuel; they may need to alter accounting, labeling, invoicing and recordkeeping to distinguish taxed motor fuel from tax‑exempt marine fuel.
- State budget/transportation funds: Potential reduction in motor fuel tax receipts (amount not specified in bill) that currently flow into state funds supported by motor fuel taxes.
- Enforcement and administration: Illinois Department of Revenue will need to implement guidance and compliance processes to define, certify and audit qualifying marine fuel transactions.
Procedural/timeline aspects
- Effective date in bill text: exemption applies on and after July 1, 2025. (Some summary lines in the provided materials also state “effective immediately”; the operative statutory language in the provided bill text specifies July 1, 2025.)
- Legislative actions in the file show introduction in early February 2025, House readings in February, committee activity in March 2025, House passage in March 2025, and transmission to the Senate where the bill was re‑referred under Rule 19(a) to the Rules Committee.
Fiscal and administrative considerations
- Fiscal impact: The bill does not include an appropriation or estimate. Exempting marine fuel from the motor fuel tax will reduce state tax receipts; the magnitude depends on marine fuel volumes and current taxed prices. No revenue offset is specified.
- Administrative impact: Tax administration will require clear rules to distinguish “marine fuel” from taxable motor fuels (e.g., gasoline sold at marinas, blended fuels). Retailers and distributors may require new labeling, product codes, or reporting procedures; the Department of Revenue likely would issue implementing guidance.
Notes and caveats
- The packet provided also contained unrelated legislative text (an Arizona cybersecurity/data‑encryption proposal). That material appears to be from a different jurisdiction and is not part of the Illinois Motor Fuel Tax amendment summarized here.
- The bill text does not define enforcement mechanisms, certification of marine fuel, or transitional provisions for existing inventory — those details would affect implementation and could be addressed in Department of Revenue rulemaking or later legislative amendments.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
