Biodiesel has long been lauded for it’s environmental friendliness. Because it’s so good for the environment and because it helps to reduce dependence on foreign oil, the United States Federal Government has created several tax incentives for producing, selling, and using Biodiesel.
Many of these incentives are available to small scale producers and can be obtained fairly easily. Others require quite a bit of paperwork and some even require registering your fuel production with the Environmental Protection Agency and joining the National Biodiesel Board before the tax incentives can be utilized.
Here’s a brief summary of some of the incentives we’re aware of. At the end of this article we also provide a link to a page on our website where we’ve started to collect information about the different incentives.
Before starting, it’s important to remember that a good tax professional should always be consulted before attempting to take advantage of any tax incentives. The information we provide below is for informational use only and does not constitute legal advice for tax purposes.
So, now that the Legal stuff is out of the way…here’s a summary of what we’ve learned.
Alternative Fuel Refueling Infrastructure Tax Credit
This credit gives those that qualify up to 30% of the cost of the price of equipment back as a tax credit. For example, if you’re a business and you purchased a BioPro 380 which retails for $14,995, you could possibly receive a tax credit of nearly $4500.00! Restrictions include that the equipment must have the ability to “refuel a vehicle” as part of it (the BioPro’s have a fuel filler pump integrated into them; which is why they can qualify). For personal use, you can get up to $1,000 back in the form of a tax credit for similar equipment. The tax form to use is Tax Form 8911
Here’s the details on qualifying for the credit from IRS Tax Form 8911
“Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used to store or dispense an alternative fuel (defined below) into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank.
In addition, the following requirements must be met to qualify for the credit.
– You placed the refueling property in service during your tax year.
– The original use of the property began with you.
– The property is not used predominantly outside the United States.
– If the property is not business/investment use property, the property must be installed on property used as your main home.”
Biodiesel Income Tax Credit
“A taxpayer that delivers pure, unblended biodiesel (B100) into the tank of a vehicle or uses B100 as an on-road fuel in their trade or business may be eligible for an incentive in the amount of $1.00 per gallon of biodiesel, agri-biodiesel, or renewable diesel.” – US DOT Alternative Fuels Website
The fuel must be purchased from a Biodiesel producer that’s registered with the EPA and a certificate that the fuel meets the ASTM standard for Biodiesel may also be required to claim this tax credit.
Biodiesel Mixture Excise Tax Credit
“A biodiesel blender that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of $1.00 per gallon of pure biodiesel, agri-biodiesel, or renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. Only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit.”
– US DOT Alternative Fuels Website
There are also several states that provide tax incentives for Biodiesel as well. Details on specific incentives for each state can be found here:
There also are additional tax credits available through something called RIN’s. We’re still learning about these and don’t have full details yet.
We’d like to express special thanks to Jason Burroughs of DieselGreen Fuelsin Texas. His incredible knowledge of the Biodiesel tax credits and how they can be applied is incredible! You can read more about his company here:http://dieselgreenfuels.com/
Jason also writes for the Biodiesel Smarter blog and frequently shares updates on legislative issues surrounding Biodiesel. Check out the latest fun at the blog here: http://biodieselsmarter.com/blog/
If you’d like to see more information about tax incentives for Biodiesel, be sure to visit our Biodiesel Tax Incentives page below:
IRS Tax Form 8911 – Link right to the IRS tax form
UBS Tax Incentives – List of tax incentives at our site
US Tax Incentives – Link to US Department of Energy incentives listing alternative fuel tax incentives available through US State & Federal Governments.
TurboTax – Link to see if you/your business qualify for tax incentives.