Iowa is the center of the U.S. biofuels industry. In 2025, Iowa’s 42 ethanol plants produced 4.6 billion gallons of ethanol, more than any other state, and the state’s biodiesel plants produced 266 million gallons, according to the Iowa Renewable Fuels Association. If your company is entering Iowa’s fuel market as a producer, retailer, distributor or technology provider, here is the policy landscape to understand.
Iowa’s E15 standard
In 2022, Iowa became the first state to adopt an E15 standard. Under House File 2128, beginning January 1, 2026, most retail stations must advertise and sell E15 from at least one gasoline dispenser. Smaller stations that sold less than 300,000 gallons of gasoline in 2020 and had not previously sold E15 are exempt, and retailers whose equipment cannot support higher blends can seek a waiver. The Iowa Department of Agriculture and Land Stewardship licenses fuel retailers and can refuse to renew, suspend or revoke a license for noncompliance.
Infrastructure grants
The Renewable Fuels Infrastructure Program, overseen by the Renewable Fuels Infrastructure Board with support from the Iowa Department of Agriculture and Land Stewardship, offers cost-share grants for fuel infrastructure. Retail ethanol projects can receive tiered grants covering 70 to 90 percent of costs, up to $75,000 per site, and from 2026 through mid-2030 ethanol projects generally must be E85 capable or able to handle blends of E40 or higher. Retail biodiesel projects can receive 70 percent of costs up to $50,000, and biodiesel distribution facilities can qualify for up to 50 percent of costs, with caps of $50,000 or $100,000 depending on the blends they handle.
Biodiesel tax credits
Iowa offers a biodiesel production tax credit of 4 cents per gallon on up to 25 million gallons, and a retailer tax credit for higher biodiesel blends: 5 cents per gallon for blends of 11 to 19 percent, 7 cents for 20 to 29 percent and 10 cents for 30 percent and higher. Both credits are scheduled to expire January 1, 2028, so their future could come up in upcoming legislative sessions.
A changing market
Biofuels policy is shaped at both the state and federal levels, and markets can shift quickly. Iowa’s biodiesel production fell nearly 25 percent in 2025, and the Iowa Renewable Fuels Association reported that eight biodiesel plants remained in operation. Companies entering the market should watch both state incentives and federal policy, which can change the economics of production and blending.
Who shapes biofuels policy in Iowa
The Legislature sets fuel standards, tax credits and grant funding.
The Iowa Department of Agriculture and Land Stewardship licenses fuel retailers, sets quality standards for certain biodiesel blends and supports the Renewable Fuels Infrastructure Board.
The Iowa Department of Revenue administers fuel taxes and tax credits.
The Iowa Economic Development Authority administers programs such as alternative fuel vehicle grants.
How High Yield Strategies can help
Before founding High Yield Strategies, Jake Swanson served as Governor Kim Reynolds’ lead agriculture and energy policy adviser and worked on House File 2128. Read the biofuels case study, learn more about our energy and biofuels government affairs work, or email info@hystrategies.com.
This article is general information, not legal or tax advice. Program details can change; confirm current requirements with the administering agency. Sources: Office of the Governor of Iowa (May 17, 2022); U.S. Department of Energy Alternative Fuels Data Center, Iowa ethanol and biodiesel laws and incentives; Iowa Renewable Fuels Association (March 30, 2026); CSG Midwest (Sept. 15, 2022).
