What Is IRS Form 4136 for the Federal Fuel Tax Credit?

IRS Form 4136, Credit for Federal Tax Paid on Fuels, is a document used by individuals and businesses to request a credit for the federal excise tax paid on certain fuels. When fuel is purchased, the price includes a federal excise tax. This form allows taxpayers who used those fuels for specific nontaxable purposes to reclaim that tax, effectively reducing their overall tax liability.

Determining Eligibility for the Fuel Tax Credit

Eligibility for the fuel tax credit hinges on using fuel for specific nontaxable purposes, and the “ultimate purchaser” of the fuel is the one who can claim the credit. One of the most common nontaxable uses is on a farm for farming purposes. This applies to fuel used in machinery for planting, cultivating, or harvesting agricultural products. The owner, tenant, or operator of the farm is the eligible claimant.

Another category is off-highway business use, which includes fuel for equipment in construction, mining, and timber operations, provided it is not used on public roads. The business that operates this equipment is entitled to claim the credit. Fuel used in a boat for commercial fishing also qualifies for the credit.

State and local governments can claim a credit for fuel used in their exclusive service, such as in vehicles for law enforcement or road maintenance. The credit also extends to fuel used in commercial aviation for purposes other than foreign trade. Exported fuel is another qualifying category, where the exporter can claim a credit for the tax paid on fuel they sell to a foreign buyer.

Credits are also available for alternative fuels and fuel mixtures, such as biodiesel and renewable diesel. The definition of alternative fuels was revised, and liquefied hydrogen sold or used after 2022 no longer qualifies. Several credits—including those for biodiesel, renewable diesel, agri-biodiesel, alternative fuels, and alternative fuel mixtures—will expire for fuels sold or used after December 31, 2024, unless extended by Congress.

Information Required to Complete Form 4136

You must keep a detailed record of fuel purchases to substantiate your claim. This includes all invoices, which should clearly show the date of purchase, the seller’s name and address, the type of fuel bought, and the number of gallons purchased.

You will also need logs that track how the fuel was used. For each piece of equipment or vehicle, your records should detail the type of machinery, the number of gallons consumed, and the specific dates of use. For example, a farmer must show how many gallons of diesel were used in a tractor for fieldwork versus for transportation on a highway.

The form requires the correct credit rate for each fuel type and its nontaxable use, which can be found in the most current IRS Instructions for Form 4136. For the 2024 tax year, a new statement is required for claims involving nontaxable uses of gasoline, aviation gasoline, undyed diesel fuel, or undyed kerosene. This statement must be attached to the tax return and requires the business name and EIN. It also requires the make, model, and type of equipment used, and a table comparing the claimant’s fuel costs to an IRS-estimated nationwide average.

How to Complete and File Form 4136

Form 4136 is organized by fuel type and nontaxable use. You will enter the total number of gallons for a specific use, such as gasoline used on a farm, and multiply that number by the per-gallon credit rate from the form’s instructions to determine the credit amount.

After calculating the credit for each type of fuel and use, you will sum these amounts to determine your total credit. This total is then entered on the designated line of the form. Double-checking all calculations is recommended to avoid errors.

To claim the credit, attach the completed Form 4136 to your annual income tax return, such as Form 1040 for individuals or Form 1120 for corporations. The total credit from Form 4136 will reduce your tax liability for the year. Claimants with significant fuel usage can receive a refund during the year by filing Form 4136 with Form 8849, Claim for Refund of Excise Taxes. This can be filed quarterly if the claim amount meets a specific threshold.