How To Calculate the IFTA Tax for Your Fleet

Fuel taxes are, of course, part of the daily life involved in operating a trucking company. The International Fuel Tax Agreement (IFTA) works to make tax collections for separate governments and commercial carriers.  

FMCA Filings, LLC, serves trucking companies around the nation with streamlined support in filing and registration compliance requirements. Read below, and we'll look at how to calculate IFTA fuel tax for your fleet. This system forms part of our comprehensive services, which include motor carrier permit renewal. 

What Is IFTA?

The International Fuel Tax Agreement is a collaborative effort among 48 U.S. states and 10 Canadian provinces. 

The purpose of the program is to streamline fuel tax reporting for motor carriers by eliminating the requirement for separate tax filings in every jurisdiction where a fleet operates. Instead, the agreement requires a single quarterly IFTA return filed in each covered carrier's home jurisdiction. The local taxing authority then distributes apportioned tax revenues to the appropriate states and provinces. The taxing authority calculates the apportionment based on fuel consumption and miles traveled.

Step-by-Step Guide To Calculate IFTA Fuel Tax

Here's how IFTA works for each covered carrier:

1. Track Miles Traveled and Fuel Purchased

The first essential step involves diligently tracking the miles traveled and fuel purchased in each jurisdiction you operate inside. This means accurately recording the miles traveled in each state or province and noting where you purchased fuel. Record odometer readings or use GPS-based tracking software to capture the exact mileage traveled in every jurisdiction.

Keep in mind that fuel tax rates vary by jurisdiction, so understanding where you bought fuel is crucial for proper tax calculations.

2. Calculate Fuel Consumption

Next, calculate the fuel consumption for each vehicle in your fleet. Divide the miles traveled by the fuel purchased. The resulting figure will give you the fuel efficiency (miles per gallon or MPG) for each vehicle. This data is essential for how to calculate IFTA fuel tax in each jurisdiction.

3. Understand Tax Rates in Each Jurisdiction

Every state or province sets its own tax rates for fuel consumption. These tax rates can change from quarter to quarter. That makes it essential to stay updated to accurately calculate the exact amount of fuel tax owed.

4. Calculate Fuel Tax Liability

Once you determine how much fuel your vehicles consumed in each jurisdiction and the applicable tax rates, you can calculate your fleet's fuel tax liability. The basic formula for calculating IFTA fuel tax is:

Fuel tax due = (fuel purchased in jurisdiction × tax rate) – (fuel tax paid on fuel purchases in each jurisdiction)

Carefully following this formula takes into account the amounts already paid at the point of purchase and determines the amount still owed or your refund amount. If you purchase fuel in a jurisdiction with a lower fuel tax rate than your home jurisdiction, you may be eligible for a credit. If it's higher, you will likely owe additional tax.

5. File the IFTA Quarterly Report

After assuring you know how to calculate IFTA fuel tax, you must file an IFTA quarterly report with your home jurisdiction, which is where you locate your main base of operations. The report summarizes the individual miles traveled, fuel purchased, and the fuel tax owed for each jurisdiction where your fleet has operated during the quarter.

Even if you did not purchase fuel or travel any miles in certain jurisdictions, the report is mandatory for every quarter of active operations.  

6. Pay the Fuel Tax or Receive a Refund

Once you complete IFTA filings, your business will either owe additional taxes or receive a refund. If you paid more tax in certain jurisdictions than owed, you can request processing of a refund. 

By the same token, if you owe additional taxes, you must remit payment to your home jurisdiction, which will acknowledge receipt and then distribute the taxes to the appropriate jurisdictions.

How FMCA Filings, LLC, Simplifies the Process

Filing IFTA taxes can be complex and time consuming, but FMCA Filings, LLC, makes it easier. By using our user-friendly online portal, you can streamline your reporting process. Our platform allows you to manage your miles traveled, fuel purchased, and fuel consumption data in one place, helping you stay compliant with all IFTA regulations.

FMCA Filings can assist you in:

• Accurately calculating your fuel tax liability 
• Filing quarterly reports simply and quickly
• Tracking fuel tax credits and ensuring you're not overpaying 
• Avoiding penalties for improper or late filings 

Calculating fuel taxes and understanding IFTA may seem complicated, but FMCA Filings, LLC, will help you understand how to calculate IFTA fuel tax and make the process much more manageable. 

Contact us today to let us handle the details so you can focus on what matters most — running your fleet efficiently and with less stress.