Like the old saying “money does not grow on trees” – you have to work hard and smart for your money. The same should be said for spending it. That is, if it takes much energy to make your money, make sure to use same energy to not spend it. So, don’t pay taxes you don’t have to.
When it comes to fuel taxes or IFTA, there are three types of exemptions all motor carriers or trucking companies should know. These three types of exemptions are for distance, fuel, and vehicle.
As you may know, each state or province has their own IFTA exemptions. Make sure to know the exemptions for your own state or province and the states or provinces you operate in.
Let’s say you are transporting your cargo from point A to point B and part of your route takes you on private roads or federal property. These miles will be exempt from IFTA. If you do not separate these exempt mileages, then you will end up paying for taxes you don’t have to.
Another example of some motor carriers or trucking companies that double-pay for IFTA taxes, is when they get a trip permit for a specific jurisdiction and they end up including these mileages in their IFTA report as regular mileage instead of non-tax mileage.
Here are the three types of exemptions and their categories:
Distance Exemptions or Non-Taxable Miles
Out of all the 58 IFTA jurisdictions, 48 states and 10 provinces, there are 21 states and 3 provinces that have distance exemptions.
The categories for distance exemptions or non-taxable miles are: off highway, forest roads, agricultural roads, private roads, federal property, turn-pike miles, and trip permit.
The only two jurisdictions with IFTA distance exemptions for turn-pike miles are Massachusetts and Nova Scotia.
For 2019, there are 24 states and 8 provinces that have fuel exemptions. If you live or operate in any of these states or provinces, you should know what these fuel exemptions are. Reporting this way, your vehicles might qualify for an exemption, which might lead to paying less taxes at the end of every quarter.
The categories for fuel exemptions are: off road diesel, temporary fuel permits, off-loading idle time, Indian reservation fuel, exempt fuel use claim required, farmers, gasoline, gasohol, E-85, M-85, A-55, and biodiesel.
For 2019 there are 33 states and 6 provinces that have vehicle exemptions. Again, make sure you know these vehicle exemptions if you live or operate in any of these jurisdictions. Your vehicle(s) might qualify for an exemption, which can have you paying less in fuel taxes.
The categories for vehicle exemptions are: government owned vehicles, political subdivisions, school buses, buses, special mobile equipment, farm plated vehicles, temporary permit vehicles, recreational vehicles, dealer registration plates, non-highway vehicles, and tow trucks.
To learn about your IFTA Exemptions, go to the IFTA website exemptions tables through this link: https://www.iftach.org/exempt/view/general2019n.php
In eTrucks you can enter any distance exemptions or non-taxable mileage. As per fuel and vehicles exemptions, make notes of it in your records in case of an IFTA audit. Use your total gallons or liters you used throughout the quarter to calculate the correct MPG or KPL for IFTA and claim the exempt fuel according to your state or province exemption regulation.