Iowa House Bill HF2798

Iowa 2025-2026 Regular Session

• Introduced: 5/1/26

Caption

A bill for an act relating to the excise tax on certain ethanol blended gasoline purchased exclusively for use in an implement of husbandry used in agricultural production.(Formerly HF 2343, HSB 561.)

Summary

HF 2798 would create a new exemption from Iowa’s motor fuel excise tax for ethanol-blended gasoline formulated with more than 85 percent ethanol when it is purchased at a terminal or refinery rack and used exclusively in an implement of husbandry for agricultural production. In practical terms, the bill targets high-ethanol fuel purchases for farm equipment and removes the tax at the point of sale rather than requiring the purchaser to pay the tax and later seek a refund. The bill also establishes documentation requirements to support the exemption. Purchasers would have to use an exemption certificate provided by the Department of Revenue, the certificate would need to be completed and signed, suppliers would have to retain it for at least three years, and the department would disallow the exempt sale unless proof is provided. If the fuel is later used for a nonexempt purpose, the purchaser—not the supplier—would be solely responsible for the excise tax and would have to remit it directly to the department.

Impact

HF 2798 would amend Iowa Code chapter 452A by adding a new section that removes the excise tax from qualifying high-ethanol gasoline sold for exclusive use in agricultural implements. It would shift the tax treatment from a refund-based system to an upfront exemption for this narrow class of fuel, while adding recordkeeping and certification requirements for purchasers and suppliers. The bill would affect farmers, fuel suppliers, and the Iowa Department of Revenue by creating a new compliance process and a new category of tax-exempt fuel sales.

Sentiment

The available context suggests generally favorable treatment of the bill as a technical tax relief measure for agriculture, and it advanced as a committee bill and companion measure. However, the bill was ultimately withdrawn, and there is no recorded floor debate or vote history in the provided materials to show broader support or opposition. The lack of recorded controversy suggests the measure was likely viewed as a targeted administrative and tax policy adjustment rather than a highly divisive proposal.

Contention

The main potential point of contention is the scope of the exemption: it applies only to ethanol-blended gasoline with more than 85 percent ethanol, purchased at a terminal or refinery rack, and used exclusively in agricultural implements. That narrow design may raise questions about administrative burden, proof of exclusive use, and whether the exemption should be handled through a direct exemption versus the existing refund process. Another possible concern is compliance enforcement, since suppliers must retain exemption certificates and the department must verify that fuel was not diverted to nonexempt use.