In the United States, individual states have differing and varying approaches to tax rebates and other incentives to help create and sustain the biofuels industry sector.

North Carolina

Renewable Energy Property Tax Credit (2005 NC Senate Bill 1149):

• Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with biomass equipment.
• A ceiling of $250,000 per installation applies to renewable energy property placed in service for any purpose other than residential and must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Property must be placed in service before January 1, 2011

According to Leif Forer, President of the North Carolina Biodiesel Association, Virginia, South Carolina, Kentucky and Pennsylvania are particularly appealing states because they all have nice incentive programs - a combination of producer payments and use requirements - that provide critical competitive advantages in the marketplace.

Tax Credit for Alternative Fuel Production Facilities (2004 NC House Bill 1636):

• A taxpayer that constructs and places in service a commercial facility for processing renewable fuel is allowed a credit equal to twenty five percent (25%) of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service.
• Facilities must be placed in service before January 1, 2008.
• Renewable Energy Property Tax Credit (2005 Senate Bill 1149):
• Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with biomass equipment.
• A ceiling of $250,000 per installation applies to renewable energy property placed in service for any purpose other than residential and must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Property must be placed in service before January 1, 2011

Tax Credit for Alternative Fuel Refueling and Production Facilities (2004 House Bill 1636):

• A tax credit is available for facilities that dispense biodiesel and ethanol/gasoline mixtures consisting of at least 70% ethanol.
• The credit is equal to 15% the taxpayer’s cost to construct and install the dispensing facility, including pumps, storage tanks and related equipment, that is directly and exclusively used for dispensing or storing the fuel. Equipment for storing and dispensing must clearly be identified as being associated with renewable fuel.
• The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service.
• A taxpayer that constructs and places in service in a commercial facility for processing renewable fuel is allowed a credit equal to 25% of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service, but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service.
• Facilities must be placed in service before January 1, 2008.
• Mobile Source Emission Reduction Grants:
• More than $500,000 in funding is available annually through a competitive grant program administered by the Department of Environment and Natural Resources Division of Air Quality.
• The purpose of the Mobile Source Emissions Reduction Grants program is to achieve actual reductions from on- and off- road mobile source related emissions in North Carolina.
• Funds are available for the incremental cost of purchasing alternative fuel vehicles and constructing publicly accessible facilities for dispensing alternative fuel and other projects that reduce mobile emissions.
• Annual grant deadline is December 31. Award announcements are generally made in March of the following year.