Refund on fuel tax available for off-road use


Manufacturers and contractors are often eligible for a partial refund of the federal excise tax they pay on certain fuels.

diesel gas

A federal excise tax of 18.4 cents a gallon is imposed on gasoline, with clear diesel fuel and clear kerosene being taxed at 24.4 cents a gallon. If you use these types of fuels in your business, you may be entitled to a refund of the excise tax you paid.

The amount of these taxes may be credited or refunded if the fuel is used in such off-road ways as: heating oil, in stationary engines, in non-highway vehicles and in separate engines mounted on highway vehicles.

Generally, refunds of $750 or more may be claimed quarterly on Form 8849,Claim for Refund of Excise Taxes. Alternatively, refunds may be claimed as income tax credit on Form 4136, Credit for Federal Tax Paid on Fuel.

Note that a credit or refund is not allowable for the following:

  • Any use in the propulsion engine of a registered highway vehicle, even if the vehicle is used off the highway
  • Any fuel that is lost or destroyed through fire, spillage or evaporation
  • Any use of dyed diesel fuel or dyed kerosene. In fact, you may be subject to a penalty if you use dyed fuel as a fuel in a registered diesel-powered highway vehicle

It’s important to keep records to support your claim at your principal place of business. These records should establish the following:

  • Number of gallons used during the period covered by the claim
  • Dates of purchase
  • Names and addresses of suppliers and amounts bought from each in the period covered by the claim
  • Purposes for which you used the fuel
  • Number of gallons used for each purpose