Biodiesel tax credit proposed

The Revenue Committee heard testimony March 1 on a bill intended to incentivize the retail sale of biodiesel in Nebraska.

Under LB180, sponsored by Sen. Tom Brandt of Plymouth, retail dealers that sell and dispense biodiesel at their motor fuel site on a regular basis would be eligible for a refundable state income tax credit equal to 14 cents per gallon of biodiesel sold during the prior calendar year.

Brandt said the credit would benefit Nebraska’s economy by driving demand for corn and soybean oils, which are blended with petroleum-based diesel to make biodiesel. He said the proposal is modeled on similar legislation passed last year that is intended to incentivize the retail sale of higher blends of ethanol motor fuel.

“Just as ethanol has been a huge economic … benefit to our state by adding tremendous value to a home-grown product,” Brandt said, “the same is true for biodiesel.”

He said the credit would amount to 2.8 cents per gallon of B20, which comprises 20 percent biodiesel and 80 percent petroleum-based diesel.

The state Department of Revenue could approve up to $5 million in credits each year beginning with tax year 2024. No new applications for credits could be filed after Dec. 31, 2028.

The department estimates that the bill would reduce state general fund revenue by $1 million in fiscal year 2023-24, $2.2 million in FY2024-25 and $2.3 million in FY2025-26.

Lucas Miller testified in support of LB180 on behalf of the Nebraska Soybean Association and the Nebraska Farm Bureau. He said biodiesel production adds 13 percent to the value of a bushel of soybeans.

“At a time when prices for our inputs are at all-time highs,” he said, “anything we can do to increase market price helps.”

Randy Gard testified in support of the bill on behalf of Bosselman Enterprises, the Nebraska Petroleum Marketers and Convenience Store Association and the Nebraska Chamber of Commerce and Industry.

Gard said Iowa, Illinois, Minnesota and Missouri have similar incentives for biodiesel, which can be used in existing vehicles and fueling equipment. He said the proposed credit would change the economics of biodiesel “significantly,” encouraging retailers to blend more.

No one testified in opposition to LB180 and the committee took no immediate action on it.