Iowa House Bill HSB561

Iowa 2025-2026 Regular Session

• Introduced: 1/14/26
• Refer: 1/14/26

Caption

A bill for an act relating to the excise tax on certain ethanol blended gasoline purchased exclusively for use in an implement used in agricultural production.(See HF 2343, HF 2798.)

Summary

House Study Bill 561 creates a new exemption from Iowa’s fuel excise tax for ethanol-blended gasoline formulated with more than 85% ethanol when it is purchased at a terminal or refinery rack and used exclusively in an implement used in 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 is aimed at a narrow class of fuel transactions tied to agricultural implements, and it would amend Iowa Code chapter 452A by adding a new section, 452A.16. The explanation notes that current law already allows refunds for certain exempt uses, including agricultural implements, but this bill would provide a direct exemption for qualifying high-ethanol fuel instead of relying on the refund process. The change would affect fuel suppliers, agricultural operators, and the Department of Revenue by altering how the tax is collected and administered for these purchases.

Impact

The bill would modify Iowa’s excise tax framework for motor fuel by carving out a specific exemption from the tax imposed under section 452A.3. It would not broadly change all agricultural fuel taxation, but it would create a targeted statutory exemption for ethanol-blended gasoline above 85% ethanol purchased exclusively for agricultural implements at terminal or refinery rack locations. This would reduce upfront tax collection on qualifying sales and likely reduce the number of refund claims associated with those transactions.

Sentiment

No committee transcript or vote record is available, so there is no direct evidence of debate, support, or opposition in the provided materials. Based on the bill’s subject matter and its committee-bill framing, the measure appears to be a technical tax policy proposal intended to simplify treatment of a specific agricultural fuel use. The available text suggests a neutral-to-supportive policy posture, but the record provided does not show whether legislators or stakeholders expressed agreement or concern.

Contention

The main potential point of contention is the tax exemption itself: supporters may view it as a simplification for farmers and fuel distributors, while opponents could question the revenue impact or the need for a special carveout when a refund mechanism already exists under current law. Another possible issue is administrative verification—ensuring the fuel is purchased exclusively for use in agricultural implements and meets the high-ethanol threshold at the terminal or refinery rack. No specific objections or named opponents are included in the provided record.