SB 254 creates two new Indiana tax credit programs aimed at encouraging the sale and blending of biofuels. The first credit applies to higher ethanol blend sold at qualifying fueling stations and is set at 5 cents per gallon for fuel dispensed through a metered pump. The second credit applies to blended biodiesel or renewable diesel and covers three categories of activity: retail sales at fueling stations, direct sales by distributors to final users in Indiana, and blending at Indiana terminals. For retail dealers and distributors, the credit varies by blend percentage, ranging from 5 cents to 18 cents per gallon; for blenders, the credit is 3.5 cents per gallon for qualifying gallons blended at an Indiana terminal.
Impact
The bill adds new chapters to Indiana Code concerning taxation and also amends existing biodiesel definitions in IC 6-6-2.5. It would allow eligible taxpayers to claim credits against state adjusted gross income tax liability beginning with taxable years after December 31, 2025, with the new provisions taking effect July 1, 2025. The credits are nonrefundable, cannot be carried back or forward, and cannot be transferred. Each credit program is capped at $10,000 in total awards per state fiscal year, administered on a first-come, first-served basis, and both programs expire December 31, 2027.
Sentiment
The bill appears to have generally favorable support among lawmakers. The Senate Tax and Fiscal Policy Committee reported it favorably after amendment with an 11-1 vote, and the full Senate later passed it 46-3 on third reading. That voting pattern suggests broad agreement with the bill’s policy goal of supporting biofuel use, though not unanimous support.
Contention
The main points of contention appear to be less about the existence of the credits and more about their structure and limits. The bill tightly caps total annual credits at $10,000 for each program, makes them nonrefundable and nontransferable, and requires claims to be processed in chronological order, which may limit practical benefit and create administrative constraints. The committee amendments also shortened the expiration date to 2027 and clarified claim procedures, suggesting some legislative concern about duration, administration, and fiscal exposure. The lone committee dissent and the three no votes on final passage indicate some opposition, likely tied to tax expenditure concerns or skepticism about the effectiveness of the incentives.