South Dakota Incentives and Laws

A tax report credit for gasoline blended with ethanol or methanol to create E85 or M85 is available to licensed blenders. The tax report credit is granted on a per gallon basis, in the amount that the rate for motor fuel exceeds the rate for E85 or M85. The credit shall be used to offset any tax liability resulting from the blending of previously untaxed ethanol or methanol. E85 and M85 are taxed at a rate of $0.10 per gallon, and other ethanol blends are taxed at a rate of $0.20 per gallon. (Reference South Dakota Statutes 10-47B-4 and 10-47B-136)

Biodiesel Production Facility Tax Refund

A tax refund is available for contractors' excise taxes and sales or use taxes paid for the construction of a new agricultural processing facility, which includes an expansion to an existing soybean processing facility if the expansion will be used for the production of biodiesel. The project cost must exceed $4.5 million in order to qualify for the refund. (Reference South Dakota Statutes 10-45B)

Ethanol Production Incentive

A $0.20 per gallon production incentive is available to ethanol producers for ethanol that is fully distilled and produced in South Dakota. To be eligible for this incentive, the ethanol must be denatured and blended with gasoline to create an ethanol blend. In fiscal year 2006 and beyond, the cumulative annual production incentives paid out may not exceed $7 million. (Reference South Dakota Statutes 10-47B-162)

State Laws and Regulations

Biodiesel Fuel Use

The South Dakota Department of Transportation and state employees using state diesel vehicles are directed to stock and use a minimum of 2% biodiesel blended fuel which meets or exceeds the most current American Standard of Testing and Materials specification D6751, whenever it is available and financially prudent to do so. (Reference Executive Order 2006-01)

Reduced Biodiesel Tax

Biodiesel and biodiesel blends are defined as 'special fuels' and are taxed at the special fuel excise tax rate of $0.22. Biodiesel is defined as a fuel comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, designated B100, and meeting the requirements of the American Society of Testing and Materials D 6751 as of January 1, 2005. Biodiesel must also be registered with the U.S. Environmental Protection Agency as a fuel and fuel additive under section 211(b) of the Clean Air Act in effect on January 1, 2006. Biodiesel blends are defined as blended special fuel containing a minimum of two percent by volume of biodiesel. (Reference Senate Bill 39, 2006, and South Dakota Statutes 10-47B-3 through 10-47B-10)

Compressed Natural Gas (CNG) Tax

CNG shall be converted to gasoline gallon equivalents (GGE) at the rate of 120 cubic feet of natural gas per one gasoline gallon equivalent. CNG is taxed at a rate of $0.10 per GGE. (Reference South Dakota Statutes 10-47B-3 and 10-47B-4)

Liquefied Petroleum Gas (LPG)Tax

LPG, when used as a motor vehicle fuel, shall be converted for purposes of taxation to equivalent liquid gross gallons using the conversion factor of 4.24 pounds per gallon of liquid at sixty degrees Fahrenheit. LPG is taxed at a rate of $0.20 per GGE. (Reference South Dakota Statutes 10-47B-3 and 10-47B-4)

Liquefied Petroleum Gas (LPG) License

In certain cases, LPG is exempt from the fuel excise tax when sold from a licensed LPG vendor to a licensed LPG user or an LPG vehicle owner. LPG purchasers must obtain a propane user license before LPG is delivered into a storage tank that can be used to deliver fuel into a motor vehicle. (Reference South Dakota Statutes 10-47B-167)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in South Dakota

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