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Sales tax incentives to promote E15 gasoline approved in Illinois

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(The Center Square) – Tax incentives for retailers to sell gas with a higher ethanol blend is now law in Illinois.

Gov. J.B. Pritzker signed Senate Bill 1963 that gives gas stations a 10% sales tax exemption to sell gasoline with a higher blend of ethanol. The sales tax incentive is designed to boost sales of gasoline with 15% ethanol blend, said Russ Orrill, public policy manager for the Illinois Corn Growers Association.

“In Iowa, there are a lot more stations that sell gas with an E15 blend. We’re trying to increase the need and the want for E15 here in Illinois,” Orrill said.

Most Illinois motorists buy gas with a 10% blend of ethanol. In May, the Environmental Protection Agency issued a waiver to allow the sale of 15% ethanol blend gasoline this summer.

The EPA is expected to permit year-round sales of E15 gasoline in seven Midwest states, including Illinois, starting in 2024. The sales tax incentives are voluntary. Retailers can use them to increase market demand for E15 blend gas.

“Ethanol is a commodity that our farmers grow in our backyards throughout the state of Illinois. It’s renewable and sustainable,” Orrill said. “It lowers the carbon intensity of gasoline. It reduces the CO2 emissions by 40 to 50%.”

The new rule provides a 10% sales tax exemption for the E15 blend that most vehicles can use. There is a 20% sales tax exemption for fuel with a 20% to 50% blend of ethanol, and a 100% tax exemption for vehicles that can run on fuel with an 85% blend of ethanol.

State Sen. Pat Joyce, D-Essex, introduced the legislation earlier this year with the backing of Sen. Celina Villanueva, D-Chicago.

“They were both tremendous to work with,” Orrill said. “Joyce is a farmer himself.”

The new tax structure will help farmers and be better for the environment, Joyce said.

“When the demand for ethanol-based fuel goes up, we see the demand for Illinois corn rise as well,” Joyce said in a statement.

The sales tax measures were written into a larger tax omnibus bill that passed the Illinois House on a 79-25-2 vote and the Senate on a 53-1 vote.

The sales tax exemptions are set to expire in 2028. Joyce’s original legislation would have extended them through 2030.

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