Incentives for Ethanol Production

The State of Kansas promotes renewable fuel, offering direct financial incentives for production and sale of ethanol. The incentive rate is $0.035 for each gallon sold by the producer. (The previous rate was $0.075) In addition, $875,000 per quarter is planned to be added to the fund for distribution. If production exceeds the fund balance, the fund will be distributed on a prorate share. This incentive shall be payable for no more than seven years to any one producer.

Producers who were in production prior to July 1, 2001 and who increased production capacity on or after July 1, 2001 by an amount of five million gallons qualify for the incentive for a maximum of 15 million gallons sold per year. Producers who commenced production on or after July 1, 2001, but prior to July 1, 2012, and who sold at least five million gallons qualify for the incentive for a maximum of 15 million gallons sold per year.

Any producer who commences cellulosic alcohol production on or after July 1, 2012 must have sold at least five million gallons to qualify for the incentive for a maximum of 15 million gallons sold per year. This provision shall not apply to producers who commence alcohol production from grain.

Producers seeking this incentive should file necessary forms with the Kansas Department of Revenue. The program sunsets July 1, 2018.

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