Highway Finance
State highways maintained by the Iowa DOT are financed with federal funds and dedicated highway user revenue collected at the state level. No state General Fund (general tax) revenue is used. State and federal highway funds are principally derived from vehicle fuel taxes and registration fees.
Federal Highway Trust Fund
Fuel tax and other highway-user revenue collected by the federal government are placed in the Federal Highway Trust Fund. Congress allocates these funds to the states per provisions in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). A portion of the revenue deposited into this fund is used for highways, transit and the leaking underground storage tank trust fund, with the majority used for highways.
Federal funds are available only for reimbursement of expenditures on approved projects. To receive federal funds, the state generally must pay 10 to 20 percent of the project costs.
Federal Tax on Motor Fuel – 2007 (cents per gallon) |
||
|---|---|---|
| Fuel | Tax | Effective Date |
| Gasoline | 18.4 | 10/1/97 |
| Gasohol | 18.4 | 1/1/05 |
| Diesel | 24.4 | 10/1/97 |
| Liquid propane | 13.6 | 10/1/97 |
During 2007, Iowa anticipates approximately $201 million in federal aid formula funds will be used for improvements and maintenance of the primary road system.
Iowa Road Use Tax Fund (RUTF)
Established in 1949 by the 53rd Iowa General Assembly, the Road Use Tax Fund has provided a stable and reliable source for investing in the state's primary, secondary and municipal roadway systems.
After some off-the-top diversions, receipts into the fund are distributed according to a formula of 47.5 percent for the primary road system, 24.5 percent for secondary county roads, 8 percent for farm-to-market county roads, and 20 percent for city streets. Legislation that went into effect in 2003, which involved the transfer of jurisdiction of some roadways from the state to either a city or county government, requires a share of the Primary Road System funds (1.75 percent) to be paid to local governments.
For state fiscal year 2008, receipts into the RUTF totaled an estimated $1.122 billion. This represents $446.2 million in fuel taxes, $422.2 million in registration and other miscellaneous fees, $230.1 million in use tax on the purchase of motor vehicles, $21.9 million from underground storage tank fees, $16.3 million from driver licenses, and $13.0 million in interest.
State Excise Tax on FuelsRates as of Jan. 1, 2009 (cents per gallon, unless otherwise noted). Excise taxes on fuel are governed by Iowa Code section 452A.3. Only dyed diesel fuel used for off-highway purposes and fuel exported outside of Iowa is sold tax-free. |
||
Fuel Categories and Types |
Tax |
Effective Date |
Motor Fuel |
|
|
Gasoline |
21.0 |
7/1/09 through 6/30/10 |
Ethanol-blended gasoline (Fuel that has been blended with alcohol distilled from cereal grains, the end product containing at least 10 percent alcohol) |
19.0 |
1/1/89 |
E-85 gasoline (Ethanol-blended gasoline that contains a minimum percentage of between 70 and 80 percent by volume of ethanol) |
19.0 |
7/1/07 |
Aviation gasoline |
8.0 |
|
Special Fuel |
|
|
Diesel |
22.5 |
1/1/89 |
Aviation jet fuel |
3.0 |
|
Liquefied petroleum gas (LPG) |
20.0 |
1/1/89 |
Compressed natural gas (CNG) |
16.0/100 cubic feet |
|
Biofuel (Defined as any oxygenated product derived from soybean oil, vegetable oil or animal fats that can be used in diesel engines or aircraft. Biofuel may be a blend of diesel fuel or it may be 100 percent soybean oil, vegetable oil or animal fats. Any biofuel product is taxed as special fuel.) |
The per-gallon rate is the same as the motor fuel tax. |
|
* In 2001, the General Assembly enacted HF 716 (FY 2002 Ethanol Sales Promotion Act). The Act provided for changes in tax rates based on the gallons of ethanol-blended gasoline sold in the state each calendar year. The rate changes apply in the following state fiscal year. The Act allows the tax rates to change each July 1, depending on the percentage of ethanol-blended gasoline sold during the previous calendar year. Prior to the enactment of HF 716, the state taxed gasoline at 20 cents per gallon and ethanol at 19 cents.
