How Much Is IFTA Tax and How Do You Calculate It?

The International Fuel Tax Agreement (IFTA) streamlines fuel tax reporting for motor carriers operating across multiple jurisdictions. Before IFTA, carriers needed individual fuel permits for each state or province, creating significant administrative burdens. IFTA simplifies this by allowing qualified motor vehicles to operate under a single license issued by their base jurisdiction, reducing paperwork and improving efficiency for interstate trucking businesses. IFTA applies to businesses operating qualified motor vehicles that travel in two or more member jurisdictions, encompassing the contiguous 48 U.S. states and 10 Canadian provinces. Alaska, Hawaii, and the District of Columbia are not member jurisdictions.

Core Components of IFTA Tax

IFTA applies to specific vehicle types known as “qualified motor vehicles,” which are commercial vehicles designed for transporting property or people. A vehicle qualifies if it has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds (11,797 kilograms). Alternatively, a vehicle with three or more axles, regardless of weight, also qualifies. Vehicles used in combination with a weight exceeding 26,000 pounds also fall under this definition. Recreational vehicles used exclusively for personal pleasure are exempt from IFTA requirements.

The system operates on the principle of “net fuel use,” ensuring fuel taxes are paid to the jurisdictions where the fuel is consumed, regardless of where it was purchased. When a carrier purchases fuel, any taxes paid are credited to their account. At the end of each quarter, carriers report total miles traveled and fuel purchased in each member jurisdiction. This allows for the calculation of fuel consumed per jurisdiction, and taxes are then distributed to the states or provinces where the fuel was used.

Locating Current IFTA Tax Rates

IFTA tax rates vary by state or province and are subject to quarterly changes, as determined by each individual jurisdiction. Staying informed about the most current rates is important for accurate tax calculation and reporting.

The official IFTA, Inc. website is the primary resource for finding up-to-date fuel tax rates for all member jurisdictions. Jurisdictional tax authorities also publish their current rates on their respective websites. It is important to use the correct rates for the specific quarter being reported to ensure compliance and avoid discrepancies during audits.

Calculating Your Quarterly IFTA Tax

Calculating quarterly IFTA tax involves a systematic approach to determine fuel consumption and tax liability or credit for each jurisdiction. This process begins by gathering data on total miles traveled and total gallons of fuel purchased in each jurisdiction during the reporting quarter.

First, determine your fleet’s overall average fuel mileage (MPG) for the quarter by dividing total miles driven across all jurisdictions by total gallons of fuel purchased. Next, to ascertain fuel consumed in each specific jurisdiction, divide the miles traveled in that jurisdiction by your overall fleet MPG.

Once fuel consumption per jurisdiction is known, multiply that figure by the current IFTA tax rate for that specific jurisdiction to calculate the gross tax owed. From this amount, subtract fuel taxes already paid at the pump when fuel was purchased in that jurisdiction. The resulting net amount indicates either additional tax due or a credit due back to the carrier. Summing these net amounts across all jurisdictions provides the total tax liability or refund for the quarter.

IFTA Reporting and Payment

IFTA tax returns are filed quarterly, with specific deadlines. These deadlines are the last day of the month following the end of the quarter:
First quarter (January-March) is due April 30th.
Second quarter (April-June) is due July 31st.
Third quarter (July-September) is due October 31st.
Fourth quarter (October-December) is due January 31st of the following year.

If a due date falls on a weekend or federal holiday, the deadline shifts to the next business day.

Carriers must file an IFTA return every quarter, even if no miles were traveled or no fuel was purchased. Returns are filed with the carrier’s base jurisdiction, which then processes payment or refund and distributes taxes to other member jurisdictions. Many jurisdictions offer online portals for electronic filing.

Failure to file an IFTA return by the deadline or underpayment of taxes can result in penalties and interest. A common penalty for late filing is $50 or 10% of the net tax liability, whichever is greater. Interest may be assessed on delinquent taxes, often accruing monthly until paid in full. Consistent non-compliance can lead to suspension or revocation of the IFTA license, preventing interstate operation.

Essential Record Keeping for IFTA Compliance

Accurate and detailed record-keeping is important for IFTA compliance and to support information reported on quarterly returns. Carriers must maintain comprehensive mileage records for each qualified vehicle. These records should include:
Date of travel
Trip origin and destination
Routes taken
Beginning and ending odometer or hubometer readings
Total trip miles
Breakdown of miles traveled in each jurisdiction

Electronic logging devices (ELDs) and GPS tracking systems can assist in collecting mileage data, but manual trip reports are also acceptable if properly documented.

Detailed fuel purchase records are also required. Acceptable proof of tax-paid fuel purchases includes receipts, invoices, credit card receipts, or automated vendor-generated invoices. These documents must contain specific information, such as:
Date of purchase
Seller’s name and address
Fuel type
Number of gallons or liters purchased
Price per gallon
Total amount of sale
Unit number of the vehicle

Records for both retail and bulk fuel purchases must be maintained and retained for at least four years from the due date or filing date of the quarterly return, whichever is later, as they are subject to audit.