Truckers, motorists and biodiesel producers alike will soon benefit from a tax savings in Iowa on one of the state’s most beneficial products. As of July 1, diesel blended with at least 11 percent biodiesel (B11) will enjoy a tax exemption of 3 cents a gallon compared to regular diesel, a legislative victory celebrated by the Iowa Biodiesel Board and its supporters. 

Signed by Gov. Terry Branstad in February, the law has already increased the state fuel tax by 10 cents a gallon for both diesel and gasoline to help improve Iowa’s roads and bridges. Beginning July 1, biodiesel blends of B11 and above will receive a 3-cent exemption for five years.

“This state policy represents another link in the chain that secures Iowa’s energy and economic future,” said Grant Kimberley, executive director of IBB. “This incentive, along with other state policies that encourage biodiesel production and use, shores up support for a fuel that delivers jobs, diversifies our fuel supply and reduces greenhouse gases.”

Prior to 2015, the tax for diesel was $0.225 a gallon. The new diesel tax, already in effect, is $0.325 a gallon. Users of B11 or higher will now pay tax of just $0.295 a gallon.

Kimberley added that this won’t automatically mean B11 is less expensive at the pump than diesel, but: “All of the pro-biodiesel policies in Iowa working together, plus federal programs that encourage energy independence, add up,” he said. “This is likely to make B11 pretty competitive at the pump.”  

Iowa is the No. 1 biodiesel-producing state. Iowa biodiesel plants produced 227 million gallons in 2014, down slightly from the 2013 record of 230 million gallons.

Biodiesel is an advanced biofuel made from agricultural byproducts and coproducts, including soybean oil.  The Iowa Biodiesel Board is a state trade association representing the biodiesel industry.