Tax break for biodiesel nears passage in South Dakota

| 2/28/2008

A bill on the way to the governor’s desk in South Dakota would provide a tax break for biodiesel use. If signed into law, it might take a few years before the rule would be triggered.
At the request of Gov. Mike Rounds, the House and Senate unanimously approved a bill that would reduce the fuel tax on diesel that contains at least 5 percent biodiesel by 2 cents per gallon. The fuel tax applied to regular gasoline and diesel now is 22 cents per gallon. The bill – SB148 – would trim the per-gallon tax on biodiesel to 20 cents.

The per-gallon tax on ethanol already is 20 cents.

Rounds said he wants to provide the same incentive for ethanol use to truckers and other consumers of diesel. Offering the discounted tax rate for biodiesel would encourage production of the fuel made mostly from soybeans, he said.

Tax breaks would not start until biodiesel production capacity in the state reaches 20 million gallons annually. The tax break would end once production reached about 40 million gallons annually.

The loss to the state would be about $800,000.

To view other legislative activities of interest for South Dakota in 2008, click here.