The International Fuel Tax Agreement is a mutual agreement between the 48 lower states of the United States of America and the 10 Canadian provinces. The agreement is related to fuel consumption and tax payments for commercial vehicles. Without the IFTA regulations, the truck drivers need to pay the fuel taxes for each state separately.Read More
Drivers needed to go to the centers for fuel tax permits and get the fuel tax permit each time they enter a new state. This whole process was very time consuming and wasted too much time. But IFTA regulation has changed everything and has streamlined the whole fuel tax procedure. Now, the vehicle with IFTA credentials can pass through any IFTA regulated state without having to purchase the fuel tax permit.
Taxation is the price which civilized communities pay for the opportunity of remaining civilized. – Albert Bushnell Hart
Calculating the fuel tax for interstate travel appears to be a very difficult task but with the help of electronic logging devices and fleet management softwares, this calculation becomes an easy affair.
Calculation of IFTA taxes
Before going for the calculation of IFTA taxes, first you need to understand who needs to get the IFTA license. Any commercial vehicle that travels through multiple jurisdictions and has two or more axles and registered weight of 26000 pounds or more falls under the IFTA regulations. These types of vehicle owners have to get their vehicle registered under IFTA regulations and receive their IFTA credentials or permit.
Now to calculate your IFTA tax for each and every state, you have to follow a few simple steps.
- Track the number of miles travelled in each state
The most important thing in the calculations of fuel tax calculator is the number of miles travelled in each state for the quarter. Drivers used to keep a record of miles travelled in every state by manually noting down the odometer readings at the entry of each state and the exit point. It was a very tedious task and there was a huge chance of human error involved in it.
But with the help of electronic logging devices and the fleet management, drivers don’t need to pay attention to the entry or exit point of the states. All the required readings are done by the ELD and fleet management which are saved digitally. ELD and fleet management softwares create an easy to read report for the truck operators. At the end of the quarter, you can get a comprehensive report about the number of miles driven in each state during that period of time.
- Save all the fuel receipts
Commercial vehicle drivers need to save all the fuel purchase receipts and keep a safe record of them. This will help him find out the fuel consumption state wise.
ELD and fleet management makes it simple for the driver to record his fuel receipts. He can scan or manually enter the fuel purchase receipts in the electronic logging device or fleet management system.
- Calculations of fuel consumption state wise
To calculate the fuel consumption per state, you need to have the fuel mileage of the vehicle first. To get the fuel mileage you can use the following formula.
Fuel mileage = total miles driven in a quarter/ total gallons of fuel consumed
Now you can easily obtain the fuel purchases in each state by using the following formula.
Fuel consumed in a particular state = total miles driven in that state / fuel mileage
There are so many fleet management softwares in the market that very efficiently keep a record of fuel consumption. There are some electronic logging devices that come with multiple features that makes calculating fuel consumption easier.
- Tax owed to each state or province
Fuel tax rates are different for each state and province, therefore you have to calculate the tax amount individually for each state and province.
IFTA tax for particular state = tax rate of the state multiply the fuel consumed in the particular state for a quarter
With IFTA mileage tracker way you can find the amount of tax you have to pay to a state. But, you might have already paid some taxes while purchasing the fuel therefore to find the exact amount of tax you owed to a state, you have to subtract the fuel tax paid from the amount of tax you have to pay to a state.
Video Credit – expressAmber
Fuel tax owed = fuel tax required to be paid – fuel tax paid already
All these calculations are made easier with the help of the latest electronic logging devices and the fleet management softwares. ELD and fleet management softwares use GPS to track the miles driven in each state and keep the record digitally available for the fleet managers. By entering the fuel purchased receipts in the fleet management software, you are able to do the calculations digitally. These softwares provide you the exact amount of tax needed to be paid to each and every state.