Have you ever wondered why you pay so much in fuel taxes? Have you wondered how your fuel tax is calculated? If paying fuel tax seems confusing and cumbersome now, it certainly has come a long way from twenty years ago. The International Fuel Tax Agreement (IFTA) was created to simplify the reporting of fuel used by trucks operating in more than one jurisdiction and its mission was to create a more convenient process for drivers. While the process is more convenient, it can still be confusing. Here is some information to help you understand more about the IFTA and how it affects you.

 
Before the IFTA drivers had to use a "Bingo Plate" that showed all the states a fuel permit was purchased for. 
Before the IFTA was created, a driver had to purchase a fuel permit for every state in which they ran and these permit stickers were collected on a “Bingo Plate.” Many states established a Port of Entry where permits were distributed and taxes paid. This caused drivers to run miles out of route, wasting precious time and fuel.

So how does IFTA work?
IFTA takes the tax you pay at the pump when you buy fuel, and shares it with states and provinces where you use that fuel. If you purchase fuel in Pennsylvania and run through Ohio to Michigan, the taxes you paid at the pump in PA will be redistributed to cover the tax you owe Ohio and Michigan. IFTA issues one fuel tax license that covers all the jurisdictions where you operate. You do not need a fuel trip permit for each state.

Find out if your carrier (if leased onto one) provides any of these fuel tax services:
  • Pays fuel taxes for their drivers (this is rare, but if so, you will want to purchase fuel by the actual billboard price)
  • Calculates fuel taxes for their drivers and settlement deduct balances owed
  • Routes trucks to fuel stops based on fuel prices and fuel taxes
If your carrier requires you to file your own fuel tax reports, you may want to hire a fuel tax firm or purchase reputable software. (This is common with small carriers.)

Take advantage of the services your carrier does provide.
Carriers inevitably have larger resources than any single I/C on the road. This generally means they have already invested in Fuel Tax software to maximize fuel savings for all their trucks. If you work with a carrier that routes your truck to fuel stops, be smart and take advantage of service. Too often I hear “My carrier routed my truck 20 miles across the state line to purchase 120gal of fuel when the price is $0.08/gal higher over there.” What the I/C is not realizing is he will end up spending $0.14/gal in addition Fuel Tax.

Be aware of the states that do not have the same fuel tax as other states.
Indiana, Kentucky and Virginia have something called a “Surcharge.” This is a kind way of saying these states are keeping part of your money. Only purchase the amount of fuel in these states that you plan on burning in these states. Oregon never entered into the International Fuel Tax Agreement (IFTA), so they do not charge any fuel taxes at the pump. This may sound great, but it means any fuel purchase in Oregon that leaves the state will be charged fuel taxes at the rate of the state it is burned in. Hawaii and Alaska are not part of IFTA; they do not charge fuel taxes at the pump. The Northwest Territories, Nunavut, and Yukon are also not members of IFTA.

Register with the IFTA.
If your rig has two axles and a gross vehicle weight exceeding 26,000 pounds, three or more axles regardless of weight, is used in combination, and/or when the weight of such combination exceeds 26,000 pounds, you must register with the IFTA. If you qualify for IFTA but do not choose to register, you must obtain fuel trip permits to travel into or through each member jurisdiction.
  • You must apply to your base jurisdiction for an IFTA license and decals for each qualified motor vehicle that you operate in more than one IFTA member jurisdiction.
  • An IFTA license is issued by the state you choose as your base jurisdiction. This base jurisdiction will be the state in which your carrier operates if you are leased on with a carrier. If you run under your own authority, your base jurisdiction is the state where your truck is registered.
  • Procedures for obtaining the license vary according to your base jurisdiction. The IFTA website has a “One Stop Shop” which provides a list of contact information for all of the base jurisdictions. http://www.iftach.org/
  • The registration fee varies according to the base jurisdiction.
  •  IFTA licenses and decals are valid from January 1 to December 31 of each year.
  • IFTA licenses must be renewed by March 1 of each year and a valid decal displayed on each vehicle.
  • You are required to keep a copy of this license in your truck at all times.
  • If you operate multiple trucks, you only need one IFTA license, but a copy of it must be kept in 
every truck. A decal must be displayed on each truck.
  • IFTA maintains a list of fuel tax rates by state. This list is updated quarterly. Click here for the fuel tax rates by state. 
When do you have to file your fuel tax reports?
Under IFTA, you are required to file quarterly fuel tax reports.
  • The reporting quarters and due dates are: 
Reporting Quarter Due Date 
 
January - March April 30
April - June July 31
July - September October 31
October - December January 31
 
The IFTA is certainly a more efficient and effective program to simplify the payment of fuel taxes than the previous bingo plate method. But still, taxes are confusing. Fuel tax is no exception. If you would like more information on IFTA and how your fuel tax is calculated contact www.atbsshow.com and a Business Consultant can help you determine how fueling in different states affects your business. 
 

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I am fortunate to be leased to a company that has a national fuel buying program which saves me thousands of dollars per year as long as I use the Comdata card that they give me. Prices are updated daily (except weekends and holidays) and give me the pump price, the discounted price given to my company and the price after subtracting the state's fuel tax. This makes it easy to see where the cheapest fuel is along my route (as long as I can access the internet) !

November 12, 2012 15:43:01 PM

Henry - you need to purchase a weight distance tax permit (WDT) to operate in New Mexico. Any commercial vehicle with a declared gross vehicle weight in excess of 26,000 pounds is required to carry the WDT Permit. This tax is based on vehicle weight and miles traveled on New Mexico roads. The fuel tax is filed quarterly.

October 29, 2012 8:16:24 AM

Allan - The surcharge is based on Miles driven multiplied by miles per gallon, multiplied by the surcharge. But, if a driver was to not have purchased fuel at all in a surcharge state, he would not have been subject to the addition surcharge of IN, KY or VA. By simply passing through the state with fuel purchased in a neighboring state this driver would have saved this additional tax and kept the money in his/her pocket.

September 11, 2012 10:17:29 AM

other helpful website is TruckMasterFuel Finder, plots your course,gives you fuel stops (pump price, tax removed etc.)

September 06, 2012 6:41:22 AM

I don't operate in New Mexico but I understand there is some kind of mileage based permit to travel there.

September 06, 2012 6:40:24 AM

This is the IFTA chart I use when calculating fuel tax and I see no surcharge for New Mexico or anything special about New Mexico for fuel.

http://www.iftach.org/taxmatrix3/choose_tableq2.php

September 06, 2012 4:02:50 AM

I,ve heard New Mexico plays to a different drummer. Is NM like Indiana,Kentucky,or Virginia. Other than that I'm still confused.

September 05, 2012 10:50:34 AM

you're advice on not buying fuel in states with a surcharge is incorrect. The surcharge is based on miles driven divided by mpg x the surcharge just like the other fuel tax.

September 02, 2012 1:31:46 AM

Here is the link to the site I was refering to earlier... http://www.findfuelstops.com/
Just enter the cities you will be traveling to and it will show all of the fuel stops, number of parking spots, services and fuel prices with and without state fuel taxes

August 29, 2012 16:30:11 PM

Easier way to file fuel tax

August 27, 2012 19:21:15 PM

@ henry your link didn't post, please try to repost it. Also this article really helps put it all into perspective. Especially the part about Indiana, I've bought lots of fuel there, because it is cheaper and that is where my carrier always had me purchase fuel when I was a company driver.

August 20, 2012 9:32:41 AM

Henry: I don't see the link you're referring to. Try posting it again...

August 20, 2012 6:36:42 AM

Great feed back everyone.

August 17, 2012 16:25:19 PM

Every once in awhile when comparing the price of fuel in Oregon to the price of fuel in California it is cheaper to buy fuel in Oregon

August 16, 2012 16:38:33 PM

Thanks Chris.

August 16, 2012 14:23:31 PM

The easy way for me to to do this is to simply look at the price of fuel at the pump and remove the state tax from the price. Then I simply purchase the fuel with the lowest price less the fuel tax. Here is a link to a nice site that has the price with and without tax. Remember its not the goal to get a credit but to get the lowest fuel cost minus the fuel tax. This normally results in a credit but not always.

August 16, 2012 7:01:58 AM

Oregon is not a fuel tax state. For trucks over 26,000 pounds, Oregon recovers highway-use costs through a weight-mile tax rather than a diesel fuel tax. But Oregon administers an IFTA program as a service to Oregon-based companies who operate in other states that do charge a fuel tax.

August 15, 2012 9:55:13 AM

When we decide where we are buying fuel and we have the choice of states we look at the cost of our fuel deduct the fuel tax and but the cheapest fuel. It all works out in the end we fuel taxes are fuel taxes.

August 15, 2012 9:05:47 AM

Great article. The current states with a surcharge are as follows:

Indiana - 0.110
Kentucky - 0.112
Virginia - .035

August 15, 2012 8:34:29 AM

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About Chris Harrington

I have been in the trucking Industry for more than two decades. I have experience as a truck driver and in addition, have also been employed as a Freight Broker and have experience managing a fleet of trucks. I have been with ATBS since September 2001 and was one of the first employees of the company, watching it grow from just a few clients to the thousands we assist today. In my free time, I enjoy motorcycle riding, skiing and spending time with friends and family.

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