How fuel tax works/where to buy fuel

[allan5oh]

IFTA (International Fuel Tax Agreement) is an international agreement between all states/provinces of Canada and the United States. I'll try to explain how it works(even though I've never actually done a return) as best as I can. Perhaps GMAN or Mr. Booth could chime in and add whatever they like.

IFTA reports are done quarterly, and are designed to eliminate the need of buying fuel in each jurisdiction. They all want your money, even if you don't fuel up in their state/province.

How much you owe each state is determined by how many miles is done in the state, and the fuel mileage of your truck. If it gets 5 MPG, and you drove 100 miles in North Dakota, you owe them 20 gallons worth of fuel tax.

North dakotas fuel tax "rate" is 23 cents derived from this link:

http://www.etrucker.com/apps/promiles/fuelprices.asp

23 cents (per gallon) * 20 gallons = $4.60. Even if you didn't buy a drop of fuel in that state, you owe them $4.60.

Think of IFTA as a bank account. It gets a deposit every time you fuel up. At the end of the quarter, it is determined how much you "owe" each state. Some states have higher tax rates, some have lower.

You take your average fuel milage for the quarter, and knowing how much miles you did in each state, you can determine how many gallons(on average) you burned in each state. All of these $'s added up is your "total fuel tax bill". It doesn't matter where you fuel up, your total bill will be the same.

Now go back to the IFTA bank account, if the amount you have "deposited" is higher then your total bill, you get a refund. All this means is you "overpaid" during the quarter. If it's lower, then you have amounts owing.

Again, it is essentially irrelevant where you fuel up regarding fuel tax! The only way you affect your bill is by your MPG and by the miles in each state!

People always get excited when they get money back from IFTA. But it's exactly like paying too much income tax. You paid too much, you're getting your own money back!


What does this all mean? It means the fuel tax rate you pay at the pump is totally irrelevant. You have to look at the "base" price, with fuel tax removed.

Now let's go back to this link:

http://www.etrucker.com/apps/promiles/fuelprices.asp

compare Indiana vs. Illinois, Georgia vs. Florida, and there's a few other good examples.

In all of these examples, the pump price of one state is much higher, but the "Ex tax" price is cheaper! ONLY LOOK AT THE EX TAX PRICE!

Say you fueled up by the pump price only. You always grabbed fuel in Georgia. If your truck gets 6 mpg, you just increased your cost by 1 CPM since Georgias ex-tax price is 6 cents higher then Floridas!

[GMAN]

Again, it is essentially irrelevant where you fuel up regarding fuel tax! The only way you affect your bill is by your MPG and by the miles in each state!

People always get excited when they get money back from IFTA. But it's exactly like paying too much income tax. You paid too much, you're getting your own money back!


What does this all mean? It means the fuel tax rate you pay at the pump is totally irrelevant. You have to look at the "base" price, with fuel tax removed.

This is not exactly correct, at least the way it is stated. Your tax bill can be reduced or increased based upon where you run and where you fuel. To give you an idea, Indiana doesn't collect fuel tax at the pump, so I rarely buy fuel in Indiana. The price at the pump give the illusion that it is cheaper than Ohio or perhaps Illinois. Because of the fuel tax it may actually cost more when you add the fuel tax to the price of your fuel. You need to consider more than just the fuel tax and mpg when deciding where to purchase your fuel. You must also consider the actual cost of the fuel and number of miles you expect to run. When I run California, I will usually top off my tanks in Arizona, because fuel in California can run $0.20 or more per gallon more than Arizona. That isn't always the case so I usually check fuel prices before starting out on my journey and make my decisions accordingly. There have been times when fuel is less in California than Arizona. Fuel taxes are higher in California so when fuel is less expensive there I don't necessarily buy in Arizona because I will spend more money. I also avoid buying fuel in Oregon because they don't charge tax at the pump. They charge based upon a weight distance formula rather than a flat rate for all miles driven in their state.

I base my purchasing decisions on how much money I will spend at the end of the year. There is no need to only buy fuel in the higher tax states just to avoid paying tax at the end of each quarter. Even if you have to pay money each quarter, you may still spend less on fuel at the end of the year.

[merrick4]

Ok now I'm confused. I'm going to walk away from this for a few days and then come back that's how it usually works for me and then I'm sure I"ll understand it.

Gman, what websites do you use to check fuel prices? Do you use that etrucker link posted by Allen? Is that pretty much the standard that most use?

By the way thanks to both of you for taking the time to write this stuff out.

[GMAN]

I use http://www.dieselboss.com/fuel.htm. You can check Pilot, Flying J, TA, Petro and Loves. Some independents are listed but are not as accurate on their current prices. This site will direct you to each companies website where you can check prices at specific locations.

[allan5oh]

This is not exactly correct, at least the way it is stated. Your tax bill can be reduced or increased based upon where you run and where you fuel.

I wasn't talking about the bill at the end of the quarter. I'm talking about your "total"(All fuel tax paid at pump including your dues/return at end of quarter).

When I was running from Winnipeg to Minneapolis, I'd get around $600 back every quarter.

To give you an idea, Indiana doesn't collect fuel tax at the pump, so I rarely buy fuel in Indiana.

That shouldn't be the criteria, but you're right. It should always be whatever "base price" is cheaper.

The price at the pump give the illusion that it is cheaper than Ohio or perhaps Illinois.

exactly! Illinois is ALWAYS cheaper! It's actually one of the best states to fuel up in.

Because of the fuel tax it may actually cost more when you add the fuel tax to the price of your fuel.

It's not because of the fuel tax, it's because you're paying more for the fuel WITHOUT fuel tax.

You need to consider more than just the fuel tax and mpg when deciding where to purchase your fuel.

Actually neither come into play when purchasing your fuel. It's 100% about the range of your truck, and where the cheapest fuel is excluding fuel tax.

You must also consider the actual cost of the fuel and number of miles you expect to run. When I run California, I will usually top off my tanks in Arizona, because fuel in California can run $0.20 or more per gallon more than Arizona. That isn't always the case so I usually check fuel prices before starting out on my journey and make my decisions accordingly. There have been times when fuel is less in California than Arizona.

I see cali has a 10 cent/gallon higher fuel tax rate then Arizona. Take 10 cents off the price in cali, or just take all of the fuel tax off in both states. That will determine which fuel is cheaper.

I also avoid buying fuel in Oregon because they don't charge tax at the pump.

According to etrucker, their fuel is still cheaper then most states surrounding it, especially cali and nevada. Idaho being the only exception. So according to this info, if you fuel up in California, Nevada, or Washington you're making a mistake.

I base my purchasing decisions on how much money I will spend at the end of the year. There is no need to only buy fuel in the higher tax states just to avoid paying tax at the end of each quarter. Even if you have to pay money each quarter, you may still spend less on fuel at the end of the year.

Exactly, you want to buy the fuel itself the cheapest possible, not buy more expensive fuel(ex tax). How much you pay or get back at the end of the quarter is totally irrelevant.

[century451]

Dont buy fuel in states that have an excise tax and pretty much no matter the state you buy most of your fuel in when your taxes get paid, each state is gonna get their piece of the pie off of the miles you drove in their state. Thats how is seemed to work for me anyway.

[allan5oh]

Unfortunately that dieselboss website does not show the "base price". But it is a good starting point.

I'll tell you right now some of the best states to fill up in(base price ~2.60 and below):

North Carolina 2.562
Kentucky 2.586
Mississippi 2.557
New Jersey 2.589
Ohio 2.606
Pennsylvania 2.577
Tennessee 2.587
Virginia 2.544


worst(above 2.75):

California 2.804
Colorado 2.846
Iowa 2.791
Kansas 2.824
Minnesota 2.83
North Dakota 2.809
Nebraska 2.796
Nevada 2.854
Oklahoma 2.77
South Dakota 2.806
Utah 2.788
Washington 2.785
Wyoming 2.778

Notice how Indiana and Oregon are NOT on there!

Try out this link for a 15 day trial:

www.kevinonxm.com

click on "fuel optimization"

[mike3fan]

Or lease onto a company that pays for the fuel tax and then buy the cheapest pump price you can find.......

[carolinatrucker]

Thanks for inviting me to play Fantasy Football. Should be a fun time. I've been in another league for the last 3 years and won the last 2, so......good luck!!

[merrick4]

One thing all this has me wondering, how do the big companies do this? I mean I'm writing down actual mileage traveled in each state. When I was with a big company they didn't tell me what route to take and wasn't tracking every move I made (well they had the Qualquom sp?) Do they just estimate? And if so why can't we just do the same?

[GMAN]

Carrier's are required to account for all miles run in each state. You may try to estimate, but if and when you are audited, it could come back to bite you.

[merrick4]

Carrier's are required to account for all miles run in each state. You may try to estimate, but if and when you are audited, it could come back to bite you.

GMAN I've been wondering something. Who does the auditing of these things. Is this separate than the DOT? I mean is this done by the State taxing officials?

[GMAN]

Merrick, it is the state who usually comes in and does the auditing of a carrier.

[hpete]

If you go to the IFTA website they have the tax rates listed for each state. Subtract the tax from the pump price and you have the actual fuel price.

[solo379]

Or lease onto a company that pays for the fuel tax and then buy the cheapest pump price you can find.......

And that's exactly what i do!
When i was paying my own fuel taxes, it's normally was +-$50 quarterly.
Now, company pays around $600! :wink: 8)

[GMAN]

I constantly monitor fuel prices. To cite one example, I just returned from a run to south Alabama. Fuel at the Pilot just north of Mobile was $2.85 for cash. Flying J south of Montgomery was $2.75. That is a huge difference in money. You can find that across the country. Prices with the chains can vary widely from one location to another, even in the same state.