Iowa Senate Approves Renewable Chemical Production Tax Credit Legislation

On March 17, 2016, the Iowa State Senate voted 46-3 to approve Senate File 2300, a bill creating a production tax credit for renewable chemicals. The legislation was created to attract investment in renewable chemical manufacturing and biorefining to Iowa, and covers the production of higher value biochemicals from plant materials left over from biofuel production. The House Ways and Means Committee approved House File 2288, a companion bill, and sent the measure to the House floor. Senate File 2300 allows eligible businesses to claim a five cent tax credit per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Tax credits resulting from the bill will be capped at $105 million per year, with a limit of $10 million per company. The Biotechnology Innovation Organization (BIO) released an announcement in favor of the renewable chemical tax credit. Brent Erickson, Executive Vice President of BIO's Industrial & Environmental Section, stated: "Renewable chemicals help protect the environment and create new jobs. Iowa's new tax credit will encourage biotechnology and renewable chemical companies to make investments and deploy innovative homegrown technology in Iowa. BIO will continue to work with the Iowa legislature, other states and the federal government to level the playing field in economic development incentives for renewable chemical and biobased manufacturing technologies."