When you buy gas at the pump you are paying a fuel tax to the federal government that they use to maintain highways and roads. But what if the fuel you are purchasing is actually for off-road use? Answer: You can request a credit for the fuel tax paid on your federal income tax return. The credit is reported on IRS Form 4136, and calculated by the number of gallons multiplied by the applicable credit rate.
It’s also not limited to cars and trucks; fuel is necessary for farmers, landscapers, manufacturers, commercial fishing and construction companies, and the regular use of chainsaws, generators, lawn mowers, forklifts, bulldozers, and other related equipment can apply for the “off-highway” use category of the credit. Other companies and organizations can benefit from this credit if they are using vehicles on the road: School bus companies, non-profit organizations, and more.

Be sure to note that this is a refundable tax credit and not a tax deduction. What’s the difference? A tax credit saves you tax dollar for dollar; a deduction will reduce the amount of money that tax is calculated on.

Looking for more clarity on the Federal Tax Paid Credit on Fuels? Contact your advisor at ClarkSilva and we’d be happy to answer any questions you might have.