This bill introduces a new section, 452A.16, which exempts ethanol blended gasoline containing more than 85 percent by volume of ethanol from the excise tax when purchased at a terminal or refinery rack, provided it is exclusively used in agricultural implements. Currently, the excise tax on ethanol blended gasoline classified as E-15 or higher varies between 24 cents to 30 cents per gallon, depending on the distribution percentage of these fuels compared to all nonaviation gasoline motor fuel.

The bill aims to support agricultural production by reducing the tax burden on farmers who utilize high-ethanol gasoline in their equipment. Under existing law, individuals can claim a refund for excise taxes paid on motor fuel used for exempt purposes, including agricultural implements, but this new provision specifically targets the exemption for high-ethanol gasoline, streamlining the process for agricultural producers.