Illinois Raises Biodiesel Blend to B20 as Incentive Policy Takes Full Effect

A policy designed to promote higher biodiesel use in the U.S. state of Illinois has reached its final implementation stage, as the minimum eligible biodiesel blend for tax incentives increased from B17 to B20 on April 1, 2026. The measure, originally passed in 2022 with bipartisan support, aims to strengthen the agricultural economy while contributing to emissions reduction.

Under the updated regulation, diesel fuel containing 20% biodiesel (B20) will qualify for exemption from the state’s 6.25% sales tax. During winter months, a lower blend rate of 11% will continue to apply. The incentive structure is intended to expand demand for soybean-based biofuels and provide greater market stability for producers.

The Illinois Soybean Association has expressed support for the policy, noting its role in supporting farmers and rural economies. Association Chairman Bryan Severs stated that increasing biodiesel blend levels contributes to energy security while boosting demand for domestically produced feedstocks.

The development comes against a backdrop of declining biodiesel usage at the national level. According to data from the U.S. Department of Energy, biodiesel consumption in 2025 fell by approximately 924 million gallons, representing a 45% decrease. In contrast, Illinois recorded a 5% increase in biodiesel use, equivalent to an additional 10 million gallons, based on figures from the Illinois Department of Revenue. The divergence has been attributed in part to the state’s incentive framework.

State officials and lawmakers involved in the legislation have emphasized both economic and environmental considerations. Jerry Costello II, Director of the Illinois Department of Agriculture, described the policy as providing market certainty for soybean farmers while supporting domestic energy production.

Among the bill’s sponsors, Eva Dina Delgado highlighted the broader public benefits of the tax exemption, including reduced fuel costs and lower greenhouse gas emissions. Similarly, Charlie Meier pointed to the role of biodiesel in creating agricultural markets, generating employment, and lowering supply chain costs.

Patrick Joyce, another key sponsor of the legislation, noted that the policy reflects a broader strategy to diversify energy sources while supporting in-state production. The measure, he said, was the result of collaboration among multiple stakeholders, including fuel suppliers, the rail sector, and agricultural organizations.

Biodiesel is widely regarded as a cleaner-burning alternative to conventional diesel, with studies indicating it can reduce transportation-related greenhouse gas emissions by up to 74%. The transition to B20 is expected to further contribute to improved air quality, while reinforcing the role of renewable fuels within the state’s energy mix.