HB1127 creates two new tax credit programs in Indiana for biofuel sales and blending, effective for taxable years beginning after December 31, 2025 and expiring January 1, 2032. The first credit applies to higher ethanol blend sold at a fueling station and is worth $0.05 per gallon sold through a metered pump. The second credit applies to blended biodiesel or renewable diesel and provides tiered credits based on blend percentage: $0.05 per gallon for 5% to 10% blends, $0.10 per gallon for more than 10% to 20% blends, and $0.18 per gallon for blends above 20%. In addition, a blender that produces qualifying blended biodiesel or renewable diesel at an Indiana terminal may claim $0.035 per gallon on gallons above 5% produced through blending.
Impact
The bill adds two new chapters to the Indiana Code governing tax credits for higher ethanol blend and biodiesel/renewable diesel, and it amends the existing biodiesel definition statute to update technical fuel specifications. It would reduce state adjusted gross income tax liability for eligible fuel retailers, distributors, and blenders, with the higher ethanol credit capped at $10 million per state fiscal year and the biodiesel/renewable diesel credit capped at $5 million per state fiscal year. The biodiesel/renewable diesel credit is refundable, while the higher ethanol credit is not refundable but may be carried forward for up to three years; both credits are nontransferable and include pass-through entity allocation rules.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be a pro-biofuel, industry-supportive tax incentive bill with a straightforward policy purpose: encouraging sales and blending of ethanol, biodiesel, and renewable diesel in Indiana. The structure of the credits suggests an intent to promote higher-blend fuels and in-state terminal blending activity. No formal opposition or support is documented in the supplied context, so the overall sentiment cannot be assessed beyond the bill’s clearly promotional design.
Contention
The main policy questions raised by the bill’s structure are fiscal cost, the use of refundable versus nonrefundable credits, and whether the incentives are targeted appropriately across fuel types and market participants. The higher ethanol credit is limited to fueling-station sales, while the biodiesel/renewable diesel credit extends to retail dealers, distributors selling directly to final users, and blenders at Indiana terminals, which could create differing competitive advantages among market actors. Another potential point of contention is the annual cap and apportionment mechanism for the biodiesel/renewable diesel credit, as well as the Department of Revenue’s authority to verify blend percentages with the Indiana Department of Health.