When you start a business using vehicles that travel in different states or even Canadian provinces (such as a truck driving company), you are required to have an IFTA License. IFTA stands for International Fuel Tax Agreement, which is an agreement between the lower 48 states and the Canadian provinces. It’s designed to help in reporting fuel use by motor carriers that operate in more than one area. If you work in Alaska or Hawaii, you don’t need an IFTA license.
How an IFTA License Works
Once you have your IFTA license, you’ll be required to file a quarterly fuel tax report, which will determine whether you need to pay additional taxes or receive a refund on taxes on the fuel you purchase. Because fuel tax varies from state to state, you’ll be assigned a single fuel tax rate based on where your business operates, then be compensated or charged accordingly, based on your usage in all participating jurisdictions.
You’re required to have an IFTA license if your vehicle:
- Has two axles and a gross vehicle weight rating registered gross vehicle weight of more than 26,000 pounds, and/or
- Has three or more axles, and/or
- Is used in combination, with the weight exceeding 26,000 pounds gross vehicle or registered gross vehicle weight
What to Know About IFTA Licenses
Your IFTA license covers fuel tax only, not road tax, weight mileage tax, or any other taxes in the areas you travel. If you have questions about this, contact your state’s business licenses, permits & tax division to learn more.
You’ll need an IFTA license for every vehicle your company operates. Also, be aware that you will need to file your quarterly fuel reports by the following deadlines:
- April 30
- July 31
- October 31
- January 31