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Basics
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How to calculate IFTA taxes.
The whole formula in plain language: fleet MPG, taxable gallons by jurisdiction, tax-paid gallons, and how surplus or shortfall becomes tax due or credit.
The shape of the calculation
IFTA tax does not care how much fuel you bought in total. It cares about where you drove and where you bought fuel. The math reconciles those two pictures, jurisdiction by jurisdiction.
You file one return; the calculation produces a per-jurisdiction line that nets to the single number you actually pay or receive back.
Step 1: fleet MPG
Your fleet's MPG is the foundation. It turns miles in a state into gallons we say you used in that state.
Example: 10,000 miles ÷ 1,250 gallons = 8.0 MPG.
Step 2: taxable gallons by jurisdiction
For each state or province, divide miles in that jurisdiction by your fleet MPG. That is the fuel the agreement says you used there.
Example: 2,000 miles in Texas ÷ 8.0 MPG = 250 taxable gallons.
Step 3: subtract tax-paid gallons
When you pump fuel in a state, you pay that state's tax at the pump. Those gallons are credited.
+
Positive net: you used more fuel there than you paid for. You owe.
+
Negative net: you bought more there than you used. You get a credit.
Step 4: tax due or credit
Multiply the net taxable gallons in each jurisdiction by that jurisdiction's current rate. Sum across all jurisdictions for your quarterly total.
Rates vary by jurisdiction and fuel type. Always use the current quarter's rates; the calculator does this automatically.
Worked example
Given
· Total miles: 10,000
· Total fuel: 1,250 gal
· Texas miles: 3,000
· Texas fuel: 400 gal
· Texas diesel rate: $0.20 / gal
Calculation
1. Fleet MPG = 10,000 / 1,250 = 8.0
2. TX taxable gal = 3,000 / 8.0 = 375
3. TX net = 375 - 400 = -25 (credit)
4. TX tax = -25 × $0.20 = -$5.00
Texas owes you $5. Run the same four steps for every other jurisdiction; sum the column.