Senate File 257 was enacted February 25, 2015, resulting in
changes to Iowa fuel tax rates effective March 1, 2015. Fiscal filers should use Schedule IA 4136 Iowa Fuel Tax Credit for Fiscal Year Filers, form 41-036. Resident and nonresident individuals, fiduciaries of estates and
trusts, and C corporations may claim a tax credit on their income tax returns for fuel that was or will be used in
unlicensed vehicles for non-highway purposes in the tax
period. The Fuel Tax Credit cannot be claimed if the taxpayer has an active Fuel Tax Refund Permit for this tax year and made no claim to a fuel tax refund during this tax year. This Fuel Tax Credit is not available for casualty losses, transport diversions, pumping credits, off-loading procedures,
blending errors, idle time, power take-offs, reefer units, exports by distributors, or excess tax paid on gasohol/E85. Dyed diesel fuel is always sold free of Iowa fuel tax. No Fuel
Tax Credit may be claimed for dyed diesel fuel.
All undyed special fuel used in watercrafts is eligible for the Fuel Tax Credit; however, gasoline used in a watercraft does not qualify for the credit unless the watercraft was used by a commercial fisher licensed and operating under an owner’s
certificate for commercial fishing gear issued pursuant to Iowa Code section 482. 7.
The income tax credit may be claimed by members of a partnership, LLC, or S corporation. If a member is claiming an income tax credit for fuel purchased by a partnership or S corporation, each member’s share of the credit is found in Part III of the IA Schedule K-1.