How to Calculate IFTA Fuel Tax and File Your Return

The International Fuel Tax Agreement (IFTA) is a cooperative agreement among U.S. states and Canadian provinces designed to simplify fuel tax reporting for interstate motor carriers. This agreement allows carriers to report fuel use to a single base jurisdiction, which then distributes taxes to other jurisdictions where the carrier operated. This article provides a practical guide on how to calculate IFTA fuel tax, helping motor carriers navigate their reporting obligations.

Gathering Essential Data for IFTA Calculation

Accurate data collection forms the foundation for precise IFTA fuel tax calculations. Motor carriers must diligently track two primary categories of information: total miles traveled and total fuel purchased. Maintaining meticulous records is crucial for compliance and to support any potential audits.

For mileage, detailed records are necessary for every trip, including odometer readings at the beginning and end of each journey. When crossing jurisdictional borders, it is important to record the odometer reading at that specific point. Trip logs, driver logs, or electronic logging devices (ELDs) are commonly used to capture this data, ensuring all miles driven, whether loaded, unloaded, or deadhead, are accurately assigned to the correct jurisdiction. These records must identify the vehicle and include dates, origin, destination, routes of travel, and total distance.

For fuel purchases, carriers must retain all original fuel receipts. Each receipt should clearly show the date of purchase, the location (city and state or province), the type of fuel, the number of gallons or liters purchased, the price per gallon, and the vendor’s name. It is important to note that only fuel purchased for the qualified vehicle should be included in these records. Bulk fuel storage also requires specific records, including delivery receipts, quarterly inventory reconciliations, tank capacity, and withdrawal records for each bulk tank.

Maintaining organized and verifiable records is not just a best practice; it is a regulatory requirement. IFTA licensees must keep detailed mileage and fuel records for four years from the quarterly report’s due date or filing date, whichever is later. These records are subject to audit by the base jurisdiction or any other IFTA member jurisdiction.

Performing the IFTA Fuel Tax Calculation

Once all necessary mileage and fuel data have been meticulously collected, the next step involves performing the IFTA fuel tax calculation through a series of mathematical steps. This process determines the net tax or refund due for the reporting period.

The first step involves compiling the total miles traveled within each IFTA jurisdiction. This data, gathered from trip logs or ELDs, provides a clear picture of the distance covered in each state or province.

Similarly, the second step requires compiling the total fuel purchased within each IFTA jurisdiction based on retained fuel receipts.

Next, calculate the overall average miles per gallon (MPG) for the fleet across all jurisdictions for the reporting quarter. Divide total miles traveled by total fuel consumed across all jurisdictions. This single average MPG applies to all subsequent calculations. For example, if a fleet traveled 100,000 miles and consumed 20,000 gallons, the MPG is 5.

Fourth, determine taxable or refundable gallons for each jurisdiction using the formula: (Miles in Specific Jurisdiction / Overall MPG) – (Fuel Purchased in Specific Jurisdiction). A positive result indicates taxable gallons (more fuel consumed than purchased, tax owed). A negative result indicates refundable gallons (more fuel purchased than consumed, potential tax credit).

Fifth, apply current IFTA tax rates. These rates change quarterly and vary by jurisdiction and fuel type. Obtain current rates from official sources like your state’s IFTA website or iftach.org, which provides a tax rate matrix. Ensure correct rates are used for the reporting quarter.

Finally, determine the net tax or refund due. Sum all taxes owed for jurisdictions with taxable gallons and subtract any refunds from jurisdictions with refundable gallons. The result is the final amount to be paid to, or received from, the base jurisdiction.

Filing Your IFTA Tax Return

After calculating IFTA fuel tax, file the return with your base jurisdiction. IFTA returns are filed quarterly, with strict deadlines to avoid penalties. The reporting periods and due dates are:
January 1 to March 31 (due April 30)
April 1 to June 30 (due July 31)
July 1 to September 30 (due October 31)
October 1 to December 31 (due January 31)
If a due date falls on a weekend or holiday, the deadline extends to the next business day.

Transfer the calculated data, including total miles driven and fuel purchased in each jurisdiction, to your base jurisdiction’s official IFTA tax return form. Most states and provinces offer electronic filing through their IFTA portals, often the most efficient method. Some jurisdictions allow mail-in options for paper returns.

Pay any tax due electronically through the online portal, often via ACH debit or credit card. If filing by mail, a check or money order may be required. Even if no operations occurred or a refund is due, a “zero” return must be filed to maintain an active IFTA license. Failure to file on time can result in penalties, typically a minimum of $50, and interest charges.

Retain copies of the filed return and all supporting documentation, including trip logs, fuel receipts, and calculation worksheets. Maintaining organized records simplifies the audit process and helps ensure ongoing compliance.