Iowa Senate Bill SF2188

Iowa 2025-2026 Regular Session

• Introduced: 2/4/26
• Refer: 2/9/26

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 SSB 3025; See SF 2493.)

Impact

The bill modifies existing taxation regulations under section 452A.3 of the Iowa Code, which currently imposes excise taxes on gasoline depending on its ethanol content. By allowing for this exemption, SF2188 is set to impact state revenue from gasoline taxes, particularly from the agricultural sector. Moreover, the bill mandates that buyers seeking tax exemptions maintain proper documentation, specifically an exemption certificate, to prevent misuse of the tax benefit. This measure intends to ensure compliance and accountability among purchasers who benefit from the exemption.

Summary

Senate File 2188 is a legislative proposal that focuses on modifying the excise tax applied to certain ethanol-blended gasoline, specifically E-85 gasoline, which contains more than 85% ethanol by volume. The bill aims to exempt this type of fuel from excise taxation when acquired at terminal or refinery locations for use exclusively in agricultural implements, commonly known as implements of husbandry. By reducing the financial burden on farmers and agricultural workers purchasing ethanol-blended fuel, the bill seeks to promote agricultural productivity and support the farming sector in Iowa.

Contention

The bill, while beneficial to farmers, may spark debates around its financial implications for the state budget, especially concerning potential revenue losses from the excise tax. Critics may argue that such exemptions could lead to a precedent for further tax reductions in other sectors, which could dilute the overall tax base. Supporters, on the other hand, will likely emphasize the importance of supporting local farmers and the agricultural economy, pointing to the long-term benefits derived from enhancing farm operation efficiency through reduced fuel costs.