LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6746 NOTE PREPARED: Dec 20, 2024
BILL NUMBER: SB 254 BILL AMENDED:
SUBJECT: Biofuel Tax Credits.
FIRST AUTHOR: Sen. Buchanan BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: Higher Ethanol Blend Tax Credit: The bill provides tax credits for:
(1) the sale of higher ethanol blend; and
(2) the: (A) sale of blended biodiesel or renewable diesel; and
(B) blending of biodiesel or renewable diesel.
The bill provides that the amount of the higher ethanol blend tax credit is $0.05 per gallon of higher ethanol
blend sold at the taxpayer's fueling station. It provides that the total amount of higher ethanol blend tax
credits that may be awarded for a state fiscal year may not exceed $10 M.
Biodiesel Tax Credit: The bill provides that the amount of the tax credit for blended biodiesel or renewable
diesel is computed as follows:
(1) $0.05 per gallon of blended biodiesel or renewable diesel of at least 5% but not more than 10%:
(A) sold at the taxpayer's fueling station; or
(B) sold by a distributor directly to the final user.
(2) $0.10 per gallon of blended biodiesel or renewable diesel that is more than 10% but not more
than 20%:
(A) sold at the taxpayer's fueling station; or
(B) sold by a distributor directly to the final user.
(3) $0.18 per gallon of blended biodiesel or renewable diesel that is more than 20%:
(A) sold at the taxpayer's fueling station; or
(B) sold by a distributor directly to the final user.
(4) For a person who blends biodiesel or renewable diesel the product of:
(A) $0.035; multiplied by
(B) the number of gallons of blended biodiesel or renewable diesel that is more than 5% and
produced by blending biodiesel or renewable diesel at a terminal located in Indiana.
The bill provides that the tax credit for blended biodiesel or renewable diesel is refundable. It provides that
the total amount of blended biodiesel or renewable diesel tax credits that may be awarded for a state fiscal
year may not exceed $5 M.
SB 254 1 Effective Date: July 1, 2025.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise forms, update instructions, and modify the existing tax processing system to implement
this bill. The DOR’s current level of funding and resources should be sufficient to administer these tax
credits.
Explanation of State Revenues: Higher Ethanol Blend Tax Credit: The bill establishes an Adjusted Gross
Income (AGI) Tax credit for taxpayers that own fueling stations that sell higher ethanol blend for motor
vehicles. The credit is effective beginning tax year 2026, and the amount of the credit is equal to five cents
per gallon of higher ethanol blend sold by the taxpayer. The General Fund revenue loss associated with the
credit is indeterminable. However, the credit has a cap of up to $10 M per fiscal year. The revenue impact
would begin in FY 2027. The tax credit is nonrefundable, and unused credits may be carried forward for no
more than three years. The credit expires January 1, 2032.
Biodiesel Tax Credit: The bill establishes a refundable Adjusted Gross Income (AGI) Tax credit for biodiesel
and renewable diesel retail dealers, distributors, and blenders in Indiana. The biodiesel tax credit would result
in an estimated revenue loss up to $5 M annually depending on the amount of biodiesel and renewable diesel
sold and blended in the state as well as the percent of the biodiesel blend. The credit is effective beginning
tax year 2026, and the revenue impact would begin in FY 2027. The credit expires January 1, 2032.
Additional Information - In 2023, U.S. biodiesel consumption totaled 1,939 million gallons. If 2% of that
consumption was eligible for the biodiesel tax credit, retail dealers, distributors, and blenders could claim
tax credits on 39 million gallons of biodiesel. U.S. renewable diesel production capacity was 2.6 billion
gallons at the end of 2022. The biodiesel credit amount per gallon varies depending on the percent of the
biodiesel blend sold or blended. Data on total sales of higher ethanol blends (E85) in the state is not
available; however, according to the U.S. Department of Energy, there are 240 fueling stations in Indiana
that offer higher ethanol blend and 37 offering biodiesel of B20 and above.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue.
Local Agencies Affected:
Information Sources: U.S. Department of Energy. Alternative Fuels Data Center. Alternative Fueling
Station Counts by State. https://afdc.energy.gov/stations/states
U.S. Department of Energy. Alternative Fuels Data Center. U.S. Biodiesel Production, Exports, and
Consumption (Million Gallons). https://afdc.energy.gov/data/10325
U.S. Energy Information Administration. (2023, February 2). Domestic renewable diesel capacity could more
than double through 2025. https://www.eia.gov/todayinenergy/detail.php?id=55399
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 254 2