Fuel tax
Fuel tax is the per-gallon tax levied by each state and by the federal government on diesel, reconciled across states for interstate carriers through IFTA.
Last reviewed · by the Fleetchart team
Rates vary by jurisdiction, so the price at the pump differs partly because the tax differs. Buying fuel in a low-tax state does not avoid the tax — IFTA reconciles it against where the miles were run.
What it does affect is cash timing and, where a state's rate is very low, the credit position on the quarterly return.
For example, say you buy 1,000 gallons in State A at a made-up tax of 20 cents a gallon, but burn all of it running miles in State B, where the made-up tax is 35 cents. You paid 1,000 × $0.20 = $200 of tax at the pump. Your return owes State B 1,000 × $0.35 = $350, less the $200 credit from State A, so you pay $350 − $200 = $150 more.
So when you compare fuel stops, the tax part mostly evens out at filing time. What does not even out is the timing: you pay at the pump now and settle up later, so a balance due can land at the end of a quarter. Setting money aside each week keeps it from becoming a surprise.