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Kansas Incentives and Laws

Listed below are the summaries of all current Kansas incentives, laws, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (9)
• Laws and Regulations (8)

State Incentives

Alternative Fuel Vehicle (AFV) Tax Credit

An income tax credit is available for 40% of the incremental or conversion cost for qualified AFVs, based on gross vehicle weight rating (GVWR) as outlined in the table below. Qualified AFVs include vehicles that operate on a combustible liquid derived from grain starch, oil seed, animal fat, or other biomass, or produced from a biogas source.

Alternatively, a tax credit of 5% of the cost of the AFV, up to $750, is available for the purchase of an original equipment manufacturer AFV. This credit is allowed only to the first individual to take title of the vehicle. For motor vehicles capable of operating on E85, the individual claiming the credit must provide evidence of purchasing at least 500 gallons of E85 between the time the vehicle was purchased and December 31, of the following calendar year. Excess credits may be carried over for up to three years after the year in which the expenditures were made.

(Reference Kansas Statutes 79-32,201)

Alternative Fueling Infrastructure Tax Credit

An income tax credit is available for 40% of the total cost to install alternative fueling infrastructure after January 1, 2009. Qualified property must be directly related to the delivery of alternative fuel into the fuel tank of a motor vehicle propelled by such fuel. The tax credit may not exceed $100,000 per fueling station. Alternative fuels are defined as combustible liquids derived from grain starch, oil seed, animal fat, or other biomass, or produced from a biogas source. Excess credits may be carried over for up to three years after the year in which the expenditures were made. (Reference Kansas Statutes 79-32,201)

Renewable Fuel Retailer Tax Incentive

A licensed retail motor fuel dealer may receive a quarterly incentive for selling and dispensing renewable fuels, including biodiesel. A qualified motor fuel dealer is eligible for up to $0.065 for every gallon of renewable fuel sold and up to $0.03 for every gallon of biodiesel sold, if the required threshold percentage is met. The threshold percentage for the incentive payment will increase incrementally on an annual basis from 10% for renewable fuel and 2% for biodiesel in 2009 to 25% for each fuel type beginning on January 1, 2024. As of June 2011, this incentive is on hold until further notice. (Reference Kansas Statutes 79-34,171 through 79-34,176)

Biofuel Blending Equipment Tax Exemption

Qualified equipment used for storing and blending petroleum-based fuel and biodiesel, ethanol, or other biofuel is exempt from state property taxes. The exemption begins at the time of installation at a fuel terminal, refinery, or biofuel production plant, and ends 10 taxable years following the year in which the equipment was installed. Equipment used only for denaturing ethyl alcohol is not eligible. (Reference Kansas Statutes 79-232 and 79-32,251)

Biodiesel Production Incentive

A qualified Kansas biodiesel producer is eligible for a production incentive of $0.30 per gallon of biodiesel sold. The incentive is payable from the Kansas Qualified Biodiesel Fuel Producer Incentive Fund. Producers must file for the incentive on a quarterly basis through the Kansas Department of Revenue. (Reference Kansas Statutes 79-34,158)

Ethanol Production Incentive

Qualified ethanol producers are eligible for a production incentive payable from the Kansas Qualified Agricultural Ethyl Alcohol Producer Fund. An ethanol producer may collect $0.035 for each gallon sold to an alcohol blender that is in excess of the producer's base sales, up to 15,000,000 gallons, provided the producer was in production before July 1, 2001, and increases production capacity by 5,000,000 gallons over the producer's base sales. The same credit applies to a producer who began production on or after July 1, 2001, and before July 1, 2012, and who has sold at least 5,000,000 gallons to an alcohol blender. A producer who begins production of cellulosic ethanol on or after July 1, 2012, and who sells at least 5,000,000 gallons to a blender may receive $0.035 for each gallon sold, up to 15,000,000 gallons. Grain-based ethanol producers are not eligible for the cellulosic ethanol incentive. Producers must file for the incentive on a quarterly basis through the Kansas Department of Revenue. A producer may not collect the incentive for more than seven years. (Reference House Bill 2122, 2011, and Kansas Statutes 79-34,163)

Cellulosic Ethanol Production Facility Tax Exemption

Any newly constructed or expanded biomass-to-energy facility is exempt from state property taxes for up to 10 taxable years immediately following the taxable year in which construction or installation is completed. A biomass-to-energy facility includes any industrial process plant that produces at least 500,000 gallons of cellulosic alcohol fuel, liquid or gaseous fuel, or other source of energy in a quantity having a British thermal unit (BTU) value equal to, or greater than, 500,000 gallons of cellulosic alcohol fuel. Expansion of an existing biomass-to-energy facility means expansion of the facility's production capacity by a minimum of 10%. (Reference Kansas Statutes 79-229 and 79-32,233)

Cellulosic Ethanol Production Financing

The Kansas Development Finance Authority may issue revenue bonds to cover the costs of construction or expansion of a biomass-to-energy facility. A qualifying biomass-to-energy facility includes any industrial process plant that produces at least 500,000 gallons of cellulosic alcohol fuel, liquid or gaseous fuel, or other source of energy in a quantity having a British thermal unit (BTU) value equal to, or greater than, 500,000 gallons of cellulosic alcohol fuel. Expansion of an existing biomass-to-energy facility means expansion of the facility's production capacity by a minimum of 10%. (Reference Kansas Statutes 74-8949b)

Idle Reduction Weight Exemption

Any vehicle or combination of vehicles equipped with idle reduction technology may exceed the state's gross and axle weight limits by up to 400 pounds to compensate for the additional weight of the idle reduction technology. (Reference Kansas Statutes 8-1908, 8-1909, and 8-1917).

Laws and Regulations

Alternative Fuel Vehicle (AFV) Acquisition Requirements

The average fuel economy for state-owned motor vehicles purchased during Fiscal Year (FY) 2011 must be at least 10% higher than the average fuel economy of state-owned motor vehicles purchased during FY 2008. Additionally, at least 75% of new light-duty motor vehicles the state fleet acquires for use primarily within a metropolitan statistical area or a consolidated metropolitan statistical area must be AFVs. State agencies must purchase flexible fuel vehicles (FFVs) capable of operating on E85 fuel unless the desired vehicle model is not available with an E85-capable engine or the cost of the vehicle is at least $250 more than a comparable vehicle that does not use E85. When leasing motor vehicles, state agencies must lease FFVs unless no such vehicles are available for lease. (Reference Kansas Statutes 75-4616 through 75-4618)

Biofuels Use Requirement

State-owned diesel-powered vehicles and equipment must use a biodiesel blend that contains at least 2% biodiesel (B2), where available, as long as the price of biodiesel is not more than $0.10 per gallon as compared to the price of diesel fuel. Individuals operating state-owned motor vehicles must purchase fuel blends containing at least 10% ethanol (E10), as long as these fuel blends are not more than $0.10 per gallon as compared to the price per gallon of regular gasoline fuel. (Reference Kansas Statutes 75-3744a)

Regional Biofuels Promotion Plan

Kansas has joined Indiana, Iowa, Michigan, Minnesota, Ohio, South Dakota, and Wisconsin in adopting the Energy Security and Climate Stewardship Platform Plan (Platform), which establishes shared goals for the Midwest region, including increased biofuels production and use. Specifically, the Platform sets the following goals:

• Produce commercially available cellulosic ethanol and other low carbon fuels in the region by 2012;
• Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025;
• Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025;
• By 2025, at least 50% of all transportation fuels consumed in the Midwest will be from regionally produced biofuels and other low carbon transportation fuels.

The Platform also establishes a regional biofuels corridor program. The program directs state transportation, agriculture, and regulatory officials to develop a system of coordinated signage across the region for biofuels and advanced transportation fuels and to collaborate to create regional E85 corridors. The program requires standardized fuel product coding at fueling stations as well as increased education for retailers about converting existing fueling infrastructure to dispense E85.

Natural Gas and Propane Fuel Tax

Any individual using or selling compressed natural gas (CNG), liquefied natural gas (LNG), or liquefied petroleum gas (propane) as a motor fuel must report fuel use and remit taxes due to the Kansas Department of Revenue on a monthly basis. The minimum tax imposed on CNG, LNG, and propane is $0.23 per gallon, compared to the conventional motor fuel tax rate of $0.24 per gallon.

Alternatively, CNG, LNG, and propane vehicle users may apply for special permit decals to pay motor fuel taxes on a mileage basis. The number of gallons used on Kansas highways is determined based on the following miles per gallon (mpg) estimates:

(Reference Kansas Statutes 79-34,141; 79-3490; and 79-3491a through 79-3492e)

E85 Tax Rate and Definition

The minimum motor vehicle fuel tax rate on E85 is $0.17 per gallon, compared to the conventional motor fuel tax rate of $0.24 per gallon. E85 is defined as an alternative fuel that is a blend of denatured ethanol and hydrocarbon and typically contains 85% ethanol by volume, but must contain at least 70% ethanol by volume and complies with ASTM specification D5798-99. (Reference Kansas Statutes 79-3401; 79-3490; and 79-34,141)

Ethanol Blend Dispenser Requirement

A retail motor fuel dispenser that dispenses fuel containing more than 10% ethanol by volume must be labeled with the capital letter "E" followed by the numerical value representing the volume percentage of ethanol, such as E85, as specified in Kansas Department of Agriculture Kansas Administrative Regulations 99-25-10)

Biodiesel and Renewable Fuel Definitions

Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from vegetable oils or animal fats and meets the specifications adopted by rules and regulations of the Kansas Department of Agriculture pursuant to current law. The specification must meet the ASTM D6751-07 specification for biodiesel fuel (B100) blend stock for distillate fuels, but may be more stringent regarding biodiesel quality and usability. Renewable fuels are defined as combustible liquids derived from grain starch, oil seed, animal fats, or other biomass; or produced from a biogas source, including any non-fossilized, decaying, organic matter capable of powering spark ignition machinery. (Reference Kansas Statutes 79-34,155 and 79-34,170)

Low-Speed Vehicle Access to Roadways

Low-speed vehicles may only travel on roadways with a posted speed limit of up to 40 miles per hour (mph). A low-speed vehicle is any four-wheeled electric vehicle whose top speed is at least 20 mph but not more than 25 mph and is manufactured in compliance federal standards for low-speed vehicles as referenced in Title 49 of the Code of Federal Regulations, section 571.500. (Reference Kansas Statutes 8-1488; 8-15,101; 8-1701; and 8-2118)