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Biodiesel Fuel

Biodiesel, a fuel made fully or partially from vegetable oils or animal fats, is subject to Marylandís motor fuel tax and sales and use tax.

The motor fuel tax applies to biodiesel as a special fuel that is useable as a fuel in an internal combustion engine. Biodiesel is typically produced by combining a vegetable oil or animal fat with an alcohol, in the presence of a chemical catalyst. In Maryland, straight vegetable oil (SVO) would be subject to the same motor fuel requirements as biodiesel when used as a motor fuel.

The state special fuel tax rate is $.2425 per gallon of motor fuel used.

Registration

In general, you must register with the Motor-fuel, Alcohol and Tobacco Tax Unit if you do any of the following in Maryland:

  • Manufacture or produce biodiesel, even for your own use.
  • Sell biodiesel that has not been taxed as diesel fuel.
  • Use biodiesel that has not been taxed as diesel fuel to power a vehicle driven on roads or highways.
  • Import biodiesel from another state.

If you make your own biodiesel and use it in a vehicle that will be driven on roads or highways, the tax is due when you put the biodiesel into the vehicle's fuel tank. If you are required to register, you must apply for a motor fuel tax license.  You will be issued a Special Fuel User or Seller License.  There is no fee for the license.

Bonds

As a user of biodiesel, you are not required to post a bond, unless you use more than 4,000 gallons per year.  Sellers of diesel fuel, however, are required to post a bond.

Filing requirements

After we issue your license, you will be required to file motor fuel tax returns. You will receive a motor fuel tax return approximately three weeks before the due date. You must file a return even if you do not have any activity for the reporting period.

Diesel fuel users have the option of filing and paying the motor fuel tax annually or monthly, until the usage rate exceeds 4, 000 gallons per year.

There are no state tax credits available for biodiesel fuel.

Additional information

For more information about biodiesel fuel, contact the following government agencies:

Maryland Department of Environment

1800 Washington Blvd.

Baltimore, MD 21230

Phone: 410-537-3000.

U.S. Environmental Protection Agency

Ariel Rios Building
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460
Phone: 202-272-0167

Internal Revenue Service 

500 N. Capitol St. NW
Washington, DC 20221

Phone: Toll-free 1-800-829-4933 (businesses)

 



 
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