IFTA Fuel Tax Requirements for Carriers: What IFTA Is, How It Works, and How to Calculate It

If you’re in the trucking business, you’ve probably heard of IFTA taxes, or are at least aware that there’s a truIf you operate across state lines, you’ve likely heard of IFTA—or at least know there’s a fuel tax involved in interstate trucking. Still, many carriers ask the same questions every year: What is IFTA in trucking? What does the IFTA tax actually cover? And how do I stay compliant without spending hours on paperwork?

This guide breaks it all down. We’ll explain what IFTA tax is, who needs an IFTA fuel tax license, how IFTA fuel tax by state is calculated, and the best tools for IFTA reporting so you can stay compliant and focused on running your business.

What Is IFTA Tax? Understanding IFTA Meaning in Trucking

IFTA stands for International Fuel Tax Agreement. It’s an agreement between the Lower 48 states and 10 Canadian provinces that allows truckers to report and pay fuel taxes under a single license.

Before IFTA, carriers had to manage individual fuel permits, tax rates, and filing deadlines for each state or province. IFTA streamlined that process by designating one base jurisdiction to handle reporting and distribute fuel tax payments to the appropriate states and provinces.

In short, the IFTA fuel tax ensures that fuel taxes are paid based on where miles are driven, not just where fuel is purchased.

Who needs an IFTA fuel tax license?

Carriers must register for an IFTA fuel tax license if they operate a qualified motor vehicle across state or provincial lines and meet one or more of the following criteria:

• The vehicle has three or more axles, regardless of weight
• The vehicle has two axles and a gross vehicle weight over 26,000 pounds
• The vehicle is used in a combination that exceeds 26,000 pounds total

IFTA applies regardless of fuel type. If your vehicle meets the weight or axle thresholds, it generally qualifies—even if it runs on gasoline, propane, or alternative fuels.

Because state-specific rules can vary, it’s always a good idea to confirm requirements with your base jurisdiction.

Core IFTA fuel tax requirements for carriers

To stay complaint with IFTA, carriers must meet several ongoing requirements.

• Register a base state. Your base state is the state where your business is located and your vehicle is registered. If you have vehicles registered in more than one state, talk to the local register office in each state.
• Qualified vehicle. Double-check that your vehicle meets the registration requirements detailed above. IFTA applies regardless of fuel type if the vehicle meets weight or axle thresholds.
• Application. You need to apply for one IFTA license per carrier, with decals issued for each qualified vehicle. Once you get your approval decals, display them on each door. You’ll need to renew annually, but the IFTA will send you renewal paperwork.
• Fuel tax reporting. You must file a fuel tax report quarterly (four times per year) that covers all of your qualified vehicles and pay the taxes you owe. Be sure to submit receipts for all tax-paid fuel you purchased. Depending on what you’ve already paid in fuel taxes, you could end up with a refund or credit rather than having to pay.
• Recordkeeping. In addition to filing quarterly reports, you are also required to keep monthly mileage and fuel records for each individual vehicle. Record must be retained for a minimum of four years.

How to apply for an IFTA fuel tax license

To register for IFTA, you’ll apply through your base jurisdiction, which is usually the state where your business is based and where your vehicles are registered. Each state manages IFTA a little differently, but most allow you to complete the application online.

While requirements vary by jurisdiction, carriers are typically asked to provide:

• Proof of an established business location in the base state. This can include business registration documents, a lease, or other records that show your operation is legitimately based there.
• Business identification details, such as your Employer Identification Number (EIN) or state registration information.
• Vehicle information for each qualified vehicle, including unit numbers, VINs, and license plate details.
• IRP account information, if applicable. Many carriers participate in the International Registration Plan (IRP), though IRP and IFTA are separate programs.

After approval, you’ll receive one IFTA license for your business and two decals for each qualified vehicle. These decals must be displayed on the vehicle at all times. IFTA licenses and decals are renewed annually through your base jurisdiction.

How to calculate IFTA taxes (step-by-step)

There are six steps to calculating your IFTA taxes (Only three of them require math).

1. Track mileage. You must keep accurate mileage records that show where each vehicle traveled and how many miles were driven in each jurisdiction. Many carriers track mileage using beginning and ending odometer readings for each trip, along with the route and states traveled. Digital tools and GPS-based systems can also automatically log miles by state, which helps reduce errors and makes reporting and audits easier.
2. Retain fuel receipts. Every time you fuel up, keep the receipt. Organize your receipts by the state(s) where you bought the fuel.
3. Calculate overall fuel mileage. Now you’ll need to do some simple math. Add up the total miles driven by all your vehicles and the total number of gallons of fuel you bought. Then divide: Total Miles Driven ÷ Total Gallons. The result is your overall fuel mileage.
4. Calculate fuel consumption for each state. For each state, add up the total number of miles your fleet drove in that state. Divide that total by your fuel mileage: Total Miles Driven in State ÷ Overall Fuel Mileage. The result is the fuel consumed in that state. Remember you need to repeat this for every state you had trucks in during the reporting period.
5. Determine taxes owed to each state. Fuel taxes vary depending on the jurisdiction and type of fuel. You can find a chart on the IFTA website, but keep in mind those figures can change up until the reporting deadline.
6. Calculate your payment or refund. For each state, add up all the fuel taxes you owe (from the chart). Then add up all the fuel taxes you paid in that state (from your receipts). Finally, subtract: Fuel Taxes Owed in State – Fuel Taxes Paid in State. The difference is how much you owe (or are owed in a refund) from that state. Remember, you’ll need to do this for each state where you had vehicles on the road during the reporting period.

Reporting dates

The IFTA breaks the year into four quarters. You must file a report for each quarter by the relevant deadline:

• First-quarter (January through March). April 30 deadline
• Second-quarter (April through June). July 31 deadline
• Third-quarter (July through September). October 31 deadline
• Fourth-quarter (October through December). January 31 deadline

You must file your IFTA report and make payment on the due date. If you don’t, you will owe a late fee (varies by jurisdiction). If you don’t file within 30 days of the due date, or make payment within 90 days of the due date, you face more serious penalties.

Best tools for IFTA reporting

IFTA reporting doesn’t have to be a manual, spreadsheet-heavy process. Today’s carriers have access to tools that simplify mileage tracking, fuel reporting, and quarterly filing—while also making audits easier to manage.

Here are the most common tools carriers use for IFTA reporting, and how they fit together:

• GPS mileage tracking tools – GPS-based systems automatically track miles driven by state, which removes a lot of guesswork from IFTA calculations. These tools are especially helpful for multi-state operations and reduce the risk of reporting errors.
• ELDs as supporting data– While ELDs aren’t required for IFTA, they can support mileage records by validating routes, locations, and trip dates. Many carriers use ELD data alongside GPS mileage tools or IFTA software to strengthen their records during an audit.
• IFTA reporting software– IFTA-specific software pulls mileage and fuel data together, calculates fuel taxes by state, and generates quarterly reports. This is often the easiest way to stay compliant as fleets grow or operate in more jurisdictions.
• Integrated dispatch and accounting tools – Platforms that connect dispatch, mileage, and fuel data can further reduce manual work. When information flows automatically, carriers spend less time reconciling numbers and more time focused on operations.

For most carriers, the best tools for IFTA reporting are the ones that reduce manual entry, keep records consistent, and make it easy to produce audit-ready reports. The right setup depends on fleet size, how often trucks cross state lines, and how much time you want to spend managing compliance each quarter.

Accurate IFTA records can also make tax season easier by helping carriers understand fuel costs, mileage, and potential tax deductions tied to their operation.

Automate and take the stress out of IFTA reporting

IFTA reporting can be stressful and time-consuming. Fortunately, there’s a better way. Truckstop’s ITS Dispatch includes a built-in IFTA reporting tool that tracks miles and gallons by state and lets drivers enter data while they’re on the road. Pair that with a Truckstop fuel card, which automatically captures fuel purchase data, and you can reduce manual entry and avoid last-minute scrambling at tax time. When it’s time to file, the reports you need are ready in just a few clicks.

GET STARTED TODAY