International Fuel Tax Agreement (IFTA)

A pact between 48 U.S. states and 10 Canadian provinces simplifying fuel tax reporting for interstate motor carriers.

The International Fuel Tax Agreement (IFTA) is a governing accord that streamlines the reporting and payment of fuel use taxes for motor carriers who operate in more than one member jurisdiction. Before IFTA, truckers were required to obtain fuel tax permits for every single state they operated in, a complex and time-consuming process. Under IFTA, a carrier is licensed in a single 'base' state and files one quarterly fuel tax report. This report details the miles traveled and fuel purchased in every member state and province. Using the data from the quarterly report, the base jurisdiction calculates the total tax owed to each jurisdiction based on the miles driven there and credits the carrier for any tax already paid at the pump. The base state then collects any net amount due from the carrier and distributes it to the other jurisdictions, or processes a net refund to the carrier if more tax was paid than owed. Meticulous record-keeping of every mile and every gallon of fuel is legally required for IFTA compliance. Qualified motor vehicles are those with two axles and a gross vehicle weight over 26,000 pounds, or those with three or more axles regardless of weight.

How it is calculated

((Miles in Jurisdiction / MPG) * Jurisdiction Tax Rate) - (Fuel Purchased in Jurisdiction * Jurisdiction Tax Rate) = Net Tax Owed/Credit

Example

A carrier based in Florida (6.0 MPG truck) travels 1,000 miles in Georgia and purchases 100 gallons of fuel there. Georgia's IFTA tax rate is $0.333/gallon. The carrier consumed 166.7 gallons in Georgia (1,000 miles / 6.0 MPG). The tax liability for Georgia is $55.51 (166.7 gal * $0.333). The carrier gets a credit for the $33.30 in tax already paid on the 100 gallons purchased ($0.333 * 100). On their quarterly IFTA return filed in Florida, they will owe a net tax of $22.21 to Georgia.