The International Fuel Tax Agreement (IFTA) makes it easier for trucking companies to file their fuel-related tax reports. If your truck travels across states and Canadian provinces, you only have to file a consolidated report in your jurisdiction, instead of individually filing them in each location. That said, there is a licensing process to go through. Plus, you need to be mindful of the deadlines to avoid penalties and suspension. Use this article as your guide in navigating the agreement.
What Is IFTA Reporting?
IFTA reporting pertains to the tax reporting requirements as mandated by the IFTA, an agreement that simplifies tax reporting for qualified motor carriers. IFTA, Inc. is the nonprofit organization that manages and administers IFTA.
Before the IFTA was created, trucking companies needed individual fuel tax permits for each jurisdiction they passed through. Now, motor carriers can register for a license in one location, which is usually in the state where they operate.
This agreement is between 48 states and 10 Canadian provinces. Non-IFTA jurisdictions include:
- United States: Alaska, Hawaii and the District of Columbia
- Canada: Northwest and Yukon Territories and Nunavut
Although Alaska, Hawaii and Canadian territories are not required to participate in the agreement, they currently do.
Once your truck travels to participating jurisdictions, the fuel taxes you pay at the pump will automatically be credited to your account. You will then file a report at the end of each quarter to list the total miles and fuel you used in each area. Keep in mind that not all motor vehicles are covered by the IFTA. Qualified motor vehicles (QMV) include commercial motor vehicles with:
- Three or more axles
- Two axles with a gross vehicle weight rating over 26,000 pounds
- Vehicles that operate in at least two participating jurisdictions
The axles on the power unit will be the determining factor, not the axles on a trailing unit. Combination vehicles, like tractor-trailers, also need to meet the weight requirements to qualify.
How IFTA Benefits Motor Carriers
IFTA offers administrative relief to your company by:
- Requiring you to file only a single quarterly tax return
- Requiring only one license in your jurisdiction
- Making compliance simpler and easier
- Enabling you to go through only one audit process
Your base jurisdiction will process your tax return for the rest of the participating jurisdictions. If your company operates in multiple states, you can choose which among them will be your base jurisdiction. This jurisdiction refers to the location where your QMV is registered. It is also where you mainly perform your operations and keep your records.
How to Apply for an IFTA License
You can apply for an IFTA license in your base jurisdiction. Your jurisdiction may have its own online application system, but it may also accept paper applications. You could need the following requirements:
- Social Security numbers, if you are a sole proprietor, officer or director of a corporation or a member of a limited liability company
- Taxpayer number for the state you are registered in
- Federal employer identification number, if you are a business entity
- USDOT number
- IRP (cab card) number or your license plate number
- National ID number or equivalent, if relevant
Once approved, you will receive your license and decals through the mail. You should clearly display your decals on each side of your QMV. You also need to keep them in good condition, as they are proof that your vehicle is authorized under the IFTA. Failing to comply can result in fines or enforcement action.
Each jurisdiction has its own deadlines for license renewals. For instance, in California, you should renew your license by December 31 annually to qualify for a grace period. The grace period lasts until the last day of February the following year, after which you must have your renewed license and updated decals on hand. Each jurisdiction has its own set of rules with regard to grace periods.
If you only make occasional trips outside your jurisdiction, you might not need an IFTA license. Instead, you can apply for trip permits, which allow you to travel to other jurisdictions for a limited time. You will have to get a trip permit for each jurisdiction you will travel to.
IFTA Reporting Requirements
Participating jurisdictions impose motor fuel taxes, which can be applied to diesel, gasoline, ethanol blends and other fuels. You should submit your IFTA quarterly report on the last day of the month at the end of each quarter.
| IFTA Tax Reporting Period | Due Date |
|---|---|
| January 1 to March 31 | April 30 |
| April 1 to June 30 | July 31 |
| July 1 to September 30 | October 31 |
| October 1 to December 31 | January 31 |
If the due date falls on a weekend or legal holiday, then the next business day becomes the new due date. Late filing can lead to penalties, interest and license suspension. Your base jurisdiction reports the list of suspended, revoked and reinstated licenses every 10 days. Stay on top of your deadlines to avoid halting your operations.
Your IFTA report should include:
- Total miles and miles per jurisdiction
- Total gallons and gallons per jurisdiction
- Tax-paid fuel receipts
You should round to the nearest mile and gallons where possible.
How to Calculate IFTA Tax
Each jurisdiction will have its own fuel tax rates. They also define whether certain miles are tax-exempt. Tax-exempt miles will still be included under “Total Miles” on your quarterly tax return. However, you may deduct the necessary amount when you calculate “Taxable Miles” for that jurisdiction — “Taxable Miles” = Total Miles – Tax-Exempt Miles.
States may have vehicle, fuel and distance exemptions, which may vary each year. For instance, in 2025, Idaho has distance exemptions for off-highway, forest roads, private roads and federal properties. Arizona has fuel exemptions for gasoline, ethanol blends and off-road diesel. You can view the full list of exemptions on IFTA, Inc.’s website.
Additionally, some jurisdictions, like Kentucky and Virginia, charge a surcharge, which is an additional tax for using fuel in their location. These surcharges are not collected at the pump. You might see extra charges on your fuel tax report if you operate in these jurisdictions.
Check with your state if they have online services that can help with your computation to ensure accuracy. For instance, in California, you can input your total gallons and miles in the state’s online system, and it will automatically calculate the tax you owe.
Penalties and Interest
If you miss the filing deadlines, underpay your taxes or fail to file your tax report entirely, you may be subject to a penalty of $50 or 10% the amount of your owed taxes, whichever is greater. Interest is computed for all missed payments each month, starting the first day after the due date. The interest rate for 2025 is 9%.
Additionally, failures may result in your IFTA license being suspended or revoked. This will prevent you from operating in all participating jurisdictions.
Tips for Simplifying IFTA Reporting
Having a streamlined IFTA recordkeeping process can help you file your reports and pay your taxes on time. Here are some tips you can use:
- Keep an organized record of your receipts: Neatly compiling your receipts can make it easier for you to write your reports. This can also lead to a smoother auditing process, as your jurisdiction is required to audit 3% of its licensees annually. IFTA requires you to keep your distance and fuel purchase records for at least four years from the due date of your tax return.
- Stay on top of the IFTA reporting deadlines: Plotting the quarterly filing deadlines on your calendar ensures you do not end up filing your tax reports last minute. Online filing can only take a few minutes, but paper filing may take more time.
- Leverage the use of fuel cards: A fuel card can get you discounted diesel rates at different truck stops. This can help reduce the taxes you owe, while also improving your cash flow. Fuel cards can also offer reports that categorize your fuel expenses, making it easier to review your information come tax season.
Why Trust FactorLoads
FactorLoads has been helping trucking companies with their invoicing needs since 1996. With no contracts and transparent fees, our clients enjoy honest service while also improving their cash flow. By handling our clients’ invoices on the back end, we allow them to focus on their daily operations instead, including record keeping that will help them with IFTA compliance.
As the first factoring company to work with owner-operators and small trucking companies, we are determined to give our clients a competitive advantage. The best part? We are open 24/7, ready whenever our clients need us.
Make Tax Season Easier With FactorLoads
IFTA makes managing fuel-related taxes easy. However, you can make it easier by opting for FactorLoads Fuel Card Benefits. Unlock huge savings over time by getting discounts of cents per gallon at supported truck stops. You can also integrate the card with your existing business software for a streamlined operation.
You can also access IFTA Reporting features, so you can get the information you need to easily prepare your fuel tax reports. Ready to start saving? Get a free quote today.
