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Iowa’s experience administering an electric fuel excise offers lessons for Minnesota
Summary
Iowa implemented a 2.6¢/kWh excise on nonresidential EV charging plus supplemental registration fees and faced challenges locating stations, establishing ownership, measuring electricity (solar/backfeed), and station testing — lessons Minnesota officials can use.
Matt Bishop, policy director for sales and excise taxes at the Iowa Department of Revenue, presented Iowa’s approach to recapturing road-use revenue from electric vehicles and described the administrative steps and operational challenges the state encountered.
Iowa’s model combines a supplemental annual registration fee ($130 for full battery EVs, $65 for plug-in hybrids) with a 2.6¢ per-kilowatt-hour excise tax on electricity dispensed at charging locations that are not residences. Charging-station owners must obtain an electric-fuel license tied to a physical location and file consolidated returns through GovConnectIowa; returns report kilowatt-hours dispensed and the system multiplies that volume by 2.6¢/kWh to determine tax owed.
Bishop said Iowa devoted four years to prep work and integrated the excise into a larger five-year modernization of IT systems. Practical hurdles included finding and identifying charging locations (they can be at stores, hotels, campuses or government buildings), determining who owns or manages each station, and deciding how to treat "free" chargers or locations with solar generation that complicates measurement of grid-supplied electricity. Testing of charging stations is handled by Iowa’s Department of Agriculture and Land Stewardship and required new agreements and equipment.
Iowa’s first-year collections were modest in excise revenue but larger from supplemental registration fees; Bishop emphasized the two must be viewed together when evaluating total EV revenue. He also described several policy choices Minnesota lawmakers may consider: whether to exclude free chargers, how to define residence (e.g., dorms, extended-stay hotels), refund and exemption certificate processes, and filing frequency (Iowa uses semiannual returns).
Committee members asked about staff costs and distribution of chargers across metro and rural areas; Bishop said much work was folded into the existing modernization project and that most public chargers are concentrated in metropolitan areas. He recommended Minnesota examine vendor contracts and testing arrangements and consider whether to adopt Iowa’s licensing and return system or tailor it to Minnesota’s context.
Bishop closed by offering resources, statutory language and administrative rule examples for Minnesota staff and lawmakers to review.
