Kansas hearing on tax credit for higher ethanol blends draws broad industry support

House Bill 2012 would create an income tax credit worth 5¢ per gallon for retail sales of higher ethanol blends (commonly called E15 when the blend is 15% ethanol) for tax years beginning in 2026 through 2031, with a $5,000,000 annual cap and a five‑year carryforward for unused credits.

The measure was the subject of a lengthy Committee on Taxation hearing that featured producers, fuel‑retailers and agricultural trade groups. Adam Sievers of the Revisor’s Office summarized the bill, saying, “The amount of the credit would equal 5¢ per gallon of higher ethanol ... sold by the retail dealer and dispersed through metered pumps,” and noting the credit would be nonrefundable and capped at $5,000,000 per tax year.

Why it matters: proponents told the committee the credit is intended as a short‑term market‑development tool to increase the number of stations offering higher ethanol blends, support in‑state ethanol production and reduce some toxic aromatics in gasoline. Opponents did not appear in person; several members asked technical and implementation questions about how the cap would be administered and how sales would be tracked.

Department of Revenue fiscal note and administration

Kathleen Smith of the Kansas Department of Revenue told the committee the department “do[es] not have data on retail sales of qualifying higher ethanol blend fuel to accurately estimate the fiscal effect of House Bill 2012.” She said if the credit were fully utilized the bill “would reduce state general fund revenues by $5,000,000 per tax year,” and that absent an application process the department would likely process credits as tax returns are filed — effectively first‑come, first‑served unless an application…