Taxes and compliance
What is IFTA?
IFTA, the International Fuel Tax Agreement, sorts out fuel taxes for trucks that cross state lines. Instead of filing in every state, you file one quarterly return with your base state, and it settles the tax to each jurisdiction based on where you actually burned the fuel.
Updated Jul 10, 2026
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IFTA, the International Fuel Tax Agreement, is the system that sorts out fuel taxes for trucks that cross state lines. Instead of filing a fuel-tax return in every state you drive through, you file one quarterly return with your home state, and it settles the tax to each jurisdiction based on where you actually burned the fuel. It is bookkeeping, not an extra tax, and understanding it starts with the problem it was built to solve.
The problem it solves
Fuel tax is owed to the state where the fuel is used on the road, but a driver buys fuel wherever is convenient along the route. Before IFTA a carrier running several states needed a separate fuel permit and a separate tax return in each one, a paperwork load that grew with every state line crossed. IFTA replaced that with one license, one set of decals and one quarterly return filed through a single base jurisdiction, which then distributes the money to the others.
Who is in it
IFTA covers all 48 contiguous US states and 10 Canadian provinces. Alaska, Hawaii and the District of Columbia are not members. It applies to qualified motor vehicles, meaning trucks that run in two or more member jurisdictions and have three or more axles, or a gross or registered weight over 26,000 pounds, or operate in a combination over 26,000 pounds. A vehicle below those thresholds, or one that never leaves its home state, is outside IFTA.
How the math works
Over a calendar quarter, total miles divided by total gallons purchased gives the fleet miles per gallon. Then, for each jurisdiction, miles driven there divided by that fleet mpg gives the gallons deemed used, the taxable gallons for that state. The tax owed to the state is its taxable gallons times its tax rate, minus the fuel tax already paid at the pump on fuel bought inside that state. The result is a credit or a balance due for each jurisdiction, all netted out on the one return. Returns are quarterly, due the last day of the month after the quarter ends, and the mileage and fuel records behind them are kept four years in case of an audit.
Put one state on it. Run 2,000 miles through a state in the quarter, and at a fleet average of 6.5 mpg you are deemed to have used about 308 gallons there. That state taxes those 308 gallons at its own diesel rate, and whatever fuel tax you already paid buying diesel at that state's pumps is credited back. Fill up heavily in a state you barely drove through and you build a credit there and a balance due somewhere else. Buy nothing in a state you ran hard and you owe it. The return sweeps all of that into one net figure.
You register once in your base jurisdiction, usually your home state, which issues an IFTA license and two decals per truck renewed each year. Every member jurisdiction then reads the one quarterly return you file at home.
Where the pump price comes in
The tax-inclusive pump prices on the live tables above differ by state, and part of that difference is different state fuel taxes, exactly the taxes IFTA reconciles. For the week of Jul 6, 2026 Gulf Coast diesel was $4.225 a gallon and California $6.073, and state taxes are one piece of that $1.85 gap. Here is the part worth being precise about: because IFTA settles the tax to where the fuel is burned, buying fuel in a low-tax state does not change the total fuel tax a carrier owes. It changes which line of the quarterly return carries a credit and which carries a balance due, not the total. The pump price and the tax settlement are two different things.
Monday Diesel explains how IFTA works and how the pump price relates to it. It is not tax advice and it offers no filing or fuel-buying strategies. A carrier's IFTA questions belong with its base jurisdiction or its own accountant.
Monday Diesel is a free weekly read of the DOE diesel number and what it does per mile. Built entirely from EIA's public data, in your inbox before dispatch, one email a week.
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A common schedule form: for every step the DOE price sits above the base peg, the surcharge rises by a fixed amount per mile. Defaults (base $1.25, $0.06 steps, $0.01/mi each) are illustrative — real schedules vary by contract, and some use a table or a percentage of linehaul instead. This computes the output of the schedule you enter; it does not set or suggest a rate.
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Common questions
What is IFTA in simple terms?
A single quarterly fuel-tax return that covers every state and province a truck runs in. Your base state collects it and distributes the tax to each jurisdiction based on the miles you drove there.
Who has to file IFTA?
Carriers running qualified motor vehicles in two or more member jurisdictions: trucks with three or more axles, or over 26,000 pounds gross or registered weight, or a combination over that weight.
How is IFTA tax calculated?
Total miles divided by total gallons purchased is your fleet mpg. Miles in each state divided by that mpg gives the gallons taxed there, times the state's rate, minus the tax already paid at the pump on fuel bought in that state.
Does buying fuel in a low-tax state lower my IFTA bill?
No. IFTA settles the tax to where the fuel is burned, not where it is bought, so the total tax owed is the same. Where you fuel changes which line of the return shows a credit or a balance due, not the total. For filing questions, see your base jurisdiction.
Monday Diesel reports public data and explains how this market works. It does not forecast prices, and it is not purchasing, hedging, or rate-setting advice: it never tells a reader when or where to buy fuel or what surcharge to set. Figures are attributed to their agencies as published.