South Dakota implements new tax structure for ethanol and ethanol-blended fuels

New tax regulations for ethanol and ethanol-blended fuels became effective in South Dakota July 1, the date the stated entered into a new fiscal year.

The new regulations, which became law this spring, are designed to streamline the way ethanol and ethanol-blended fuels are taxed within the state. The former tax regulations established three tiers of taxation for gasoline and ethanol blended fuels. Gasoline was taxed at a rate of $0.22 per gallon, fuel containing 10 to 75 percent ethanol was taxed at $0.20 per gallon, and fuel containing 75 to 85 percent ethanol was taxed at $0.10 per gallon.

Due to the fact that many fueling stations in South Dakota have implemented ethanol blender pumps, this meant that applicable taxes were sometimes collected at both the wholesale and retail levels. The new tax regulations streamline the tax collection process essentially sliding the point of tax collection back to the wholesale level. Under the new tax regulations standard gasoline will continue to be taxed at $0.22 per gallon, while denatured ethanol is taxed at $0.08 per gallon. The two fuels can then be blended at the retail level without incurring any additional state tax liabilities.

source: ethanolproducer