How to Calculate Your IFTA Fuel Tax Obligation

The International Fuel Tax Agreement (IFTA) streamlines fuel tax reporting for interstate motor carriers. IFTA applies to qualified motor vehicles operating in two or more member jurisdictions, which include the 48 contiguous U.S. states and 10 Canadian provinces. The system allows carriers to obtain one license from their base jurisdiction and file a single quarterly fuel tax return for all IFTA-covered operations. This consolidated reporting eliminates the need for individual fuel permits for each state.

Gathering Necessary Information

Accurate record-keeping is essential for calculating your IFTA fuel tax obligation. Detailed documentation must be maintained throughout each quarter for compliance. These records must be retained for at least four years from the due date or filing date of the quarterly report, whichever is later.

You must track the total miles traveled in each IFTA jurisdiction, distinguishing between taxable and non-taxable miles. This data should be recorded for every trip, typically through odometer readings at the beginning and end of each trip and when crossing jurisdictional borders. Many carriers utilize trip logs, GPS data, or electronic logging devices (ELDs) to capture this information, as ELDs are often mandated for commercial trucks and can automatically track miles by jurisdiction. Monthly and quarterly summaries of mileage, broken down by vehicle and jurisdiction, are also required.

You must record all fuel purchases in gallons for each IFTA jurisdiction where fuel was bought. Valid fuel purchase records include receipts, invoices, or credit card receipts showing the date of purchase, seller’s name and address, fuel type, price per gallon or total sale amount, gallons purchased, and the vehicle unit number. If you maintain bulk fuel storage, records of purchases, withdrawals, and inventory on hand are also necessary, supported by vendor invoices. These records serve as proof of tax-paid fuel purchases, allowing you to claim credit on your quarterly report.

You will also need the vehicle’s average miles per gallon (MPG). This figure is derived from the total miles traveled and total fuel consumed across all jurisdictions during the reporting period. It is a calculated value used in the overall IFTA formula.

The Calculation Process

Calculating your IFTA fuel tax involves determining the net fuel consumed in each jurisdiction and then applying that jurisdiction’s fuel tax rate. This process leads to a total tax due or a credit for the reporting period.

First, determine your fleet’s overall average miles per gallon (MPG) for the reporting quarter. This is calculated by dividing the total miles traveled by all qualified vehicles across all IFTA jurisdictions by the total gallons of fuel purchased during that same period. For example, if your fleet traveled 10,000 total miles and purchased 2,000 total gallons of fuel, your average MPG would be 5.0 (10,000 miles / 2,000 gallons). This average MPG is applied uniformly to all jurisdictions.

Next, calculate the total gallons of fuel consumed in each individual jurisdiction. This is done by dividing the total miles traveled in a specific jurisdiction by your fleet’s overall average MPG. For instance, if you traveled 1,000 miles in Jurisdiction A and your average MPG is 5.0, you consumed 200 gallons in Jurisdiction A (1,000 miles / 5.0 MPG).

Once consumed gallons for each jurisdiction are known, calculate the net taxable or creditable gallons. This is done by subtracting the total gallons of fuel purchased in that specific jurisdiction from the total gallons consumed in that jurisdiction. If consumed gallons exceed purchased gallons, you have a net taxable amount. Conversely, if purchased gallons exceed consumed gallons, you have a net creditable amount.

Multiply the net taxable or creditable gallons for each jurisdiction by that jurisdiction’s current fuel tax rate. These tax rates vary by jurisdiction and are updated quarterly. You can find the most current IFTA fuel tax rates on the official IFTA Inc. website (www.iftach.org) or through your base state’s tax authority website. For example, if Jurisdiction A’s tax rate is $0.50 per gallon and you have a net taxable amount of 50 gallons, you would owe $25.00 to Jurisdiction A (50 gallons $0.50/gallon).

Finally, sum the individual tax due or credit amounts from all IFTA jurisdictions. This cumulative figure represents your total IFTA tax obligation or refund for the reporting quarter. If the sum is positive, you owe tax; if it is negative, you are due a refund.

Reporting and Payment

After completing the IFTA calculation, you must accurately report these figures and remit any tax due. Your base state or province provides its own specific quarterly IFTA tax return form. These forms are accessible on the state’s Department of Revenue or Motor Vehicle Services websites.

Upon obtaining the correct form, transfer your calculated mileage, fuel, and net tax/credit figures into the designated fields. Transcribe these amounts precisely to ensure accurate filing and avoid discrepancies during potential audits. Many state tax agencies offer online portals for IFTA filing, which can simplify the process by performing calculations automatically and providing instant confirmation of submission.

You can submit the completed IFTA return via online portals or by mailing a physical form. If filing online, log into your state’s motor carrier services or tax portal, enter the required data, and follow the prompts for submission. Some systems allow for scheduling payments in advance up to the due date.

If a tax balance is due, payment procedures vary but often include online options such as Automated Clearing House (ACH) debit or credit, or mailing a check or money order with a payment voucher. Online payment via ACH debit has no additional cost, while credit card payments may incur a convenience fee. Some states require an application to be completed before electronic payments can be made.

Quarterly filing deadlines are mandatory. IFTA returns are due on the last day of the month following the end of each calendar quarter. These deadlines are:
April 30 for the first quarter (January-March)
July 31 for the second quarter (April-June)
October 31 for the third quarter (July-September)
January 31 for the fourth quarter (October-December)

If a due date falls on a weekend or state holiday, the deadline is extended to the next business day. Failure to file on time or underpayment can result in penalties, typically a fee of $50 or 10% of the net tax liability, whichever is greater, plus interest on delinquent taxes.