Navigating the Federal Excise Tax on Trucks – What You Need to Know

excise fuel tax for trucks
January 8, 2024 0 Comments

When it comes to utilizing heavy trucks on and off the highway, business owners have a lot to handle outside of maintaining equipment and ensuring that goods and products reach their destination in time. 

Businesses that rely on trucks and machinery are also subject to a wave of different federal and/or state taxes that can impact their bottom line. From the Heavy Highway Vehicle Use Tax to the excise tax that is automatically paid at the pump with every fill-up, there is a lot for company owners to consider when it comes to taxes outside of typical expenses and deductions. 

The best way to understand these details, especially when it comes to a potential fuel tax credit for truck drivers, is to partner with an expert on this particular area of tax law.  

At TiP Excise, we can explain all the details behind the federal excise tax on trucks. Additionally, you can find out who qualifies for the fuel tax credit and how you can effortlessly put money back into your pocket and your business. 

In the meantime, here’s an overview of what you need to know when it comes to excise taxes and trucking. From a potential federal excise tax on trucks exemption to fuel tax credits that can have a significant impact, there is a lot for companies to bear in mind beyond the financial basics.  

What is the Federal Excise Tax? 

The government imposes an excise tax on the sale of specific goods or services.  Therefore, like a sales tax, the primary difference is that the excise tax tends to be included in the overall price of the product or service.  

Per the IRS, Excise taxes can be imposed in various situations, which may have accompanying tax forms and deadlines that business owners need to keep in mind. The tax may be imposed at the time of: 

  • Import 
  • Sale by the manufacturer 
  • Sale by the retailer 
  • Use by the manufacturer or consumer 

Federal excise tax is usually imposed on the sale of things like fuel, airline tickets, indoor tanning, tires, tobacco, and other goods and services, particularly the purchase of heavy trucks and highway tractors, as well as the purchase of fuel. 

Federal Excise Tax and How it Applies to Trucks and Equipment 

There are varying ways that excise tax can affect business owners who rely on heavy trucks for their day-to-day operations, starting with federal excise tax (FET) on heavy-duty commercial vehicles. 

The retail federal excise tax is a 12% tax on the sale of designated heavy highway vehicles, and it is generally paid by the purchaser at the time of the sale. 

Like all aspects of tax law, there are some noticeable caveats. The retail federal excise tax does not cover all trucks, tractors, and trailers. Therefore, it’s essential to be familiar with the IRS guidelines when it comes to what equipment might be under the excise tax umbrella. 

Keep in mind that the federal excise tax is just an example of how taxes can impact a trucking business, and owners can consult the IRS’ truckers guide for more information on the excise tax, the Heavy Highway Vehicle Tax, and other scenarios where specific deadlines and payments may come into play.  

Fuel Tax Credit for Truck Drivers 

Business owners can minimize their annual taxes and potentially get a refund on daily necessities, especially in fuel excise tax.

Trucking companies pay fuel excise tax daily, as it is automatically taxed at the gas pump unlike other excise taxes. 

The federal tax and other fees on retail gasoline and diesel fuel as of July 1, 2023, are 18.4 cents per gallon for gas and 24.4 cents per gallon for diesel, and this is in addition to any state taxes that may also be added to the price tag.  

In fact, per the U.S. Energy Information Administration, the average total state tax on fuel is approximately 32.26 cents per gallon for gasoline and 34.2 cents per gallon for diesel, and these expenses can certainly add up when fuel is required to power your business. 

You may be able to secure a huge refund on the fuel expenses that you require every day. 

Again, there are some requirements when it comes to who qualifies for the fuel excise tax credit, and the following guidelines apply: 

  • The fuel excise tax refund only applies to fuel used off the highway. So, for example, a company that requires refrigerated trucks for delivering frozen foods or produce can’t claim the fuel used to get from Point A to Point B, but they can claim the fuel used for refrigerating the inside of the truck. 
  • A suite of specific tax forms may apply to claim the refund, per the IRS guidelines. 
  • Businesses that have never pursued a fuel tax refund before may be able to claim three years’ worth of expenses, depending on their record-keeping and distinctive financial situation. 
  • Trucks and heavy equipment used off the highway for construction or landscaping purposes may also claim the fuel required to power these off-the-grid vehicles, like tractors, dozers, lawnmowers, dump trucks, and more. 

Connect with a Fuel Excise Tax Expert on Insights for Trucking Taxes  

At TiP, we will do all the research on understanding whether you qualify for a fuel excise tax credit. The best part is there is no cost obligation until we secure you the biggest refund possible. 

Connect with us today to receive a free estimate on how much money we can return to your company.  

As a leader in the trucking industry, you must actively account for all  hefty and ever-changing taxes. However, with TiP as a resource, you can find a silver lining in the form of a fuel excise tax refund, which will put much-needed funds back into your business.  

Contact us today!