You likely know that in addition to truck insurance, you need to have permits in order to legally operate your commercial vehicle. Specifically, if you are involved in interstate trucking, you have likely encountered the terms IFTA and fuel tax permits. While both relate to fuel tax compliance, they serve different purposes depending on your trucking operations. Understanding the distinction between the two can help you determine which is more appropriate for your specific needs.
What is IFTA?
The International Fuel Tax Agreement (IFTA) is an agreement among the 48 contiguous U.S. states and 10 Canadian provinces. Its primary purpose is to simplify fuel tax reporting for truckers who operate across multiple jurisdictions. With IFTA, instead of filing separate fuel tax returns in every state you travel through, you file a single quarterly return with your base jurisdiction. This centralized process calculates your fuel tax obligations and distributes payments to the states and provinces based on your miles driven in each.
IFTA is ideal for carriers that regularly operate across state lines. To comply, truckers must track the miles driven in each jurisdiction and keep all fuel receipts. Additionally, vehicles covered under IFTA must display IFTA decals, which must be renewed annually. These decals indicate that your vehicle is authorized to operate under the IFTA program.
What is a Fuel Tax Permit?
Fuel tax permits are temporary alternatives to IFTA, designed for truckers who occasionally travel across state lines. These permits are issued for specific trips and are only valid for the duration of that journey. When applying for a fuel tax permit, you must declare your route and the states you will be driving through. The permit ensures that the appropriate fuel taxes are paid to each jurisdiction during that specific trip.
Fuel tax permits are best suited for intrastate drivers who make occasional interstate trips. If you only travel outside your home state a few times a year, a temporary fuel permit may be more cost-effective and simpler than maintaining an IFTA license. These permits eliminate the need for quarterly reporting or annual decal renewals, making them a convenient option for limited interstate operations.
Which One Do You Need?
The key factor in choosing between IFTA and fuel tax permits is how often you operate across state lines. Frequent interstate drivers benefit from the streamlined reporting of IFTA, while those who make infrequent trips can save time and money with temporary fuel permits.
Vehicle Eligibility
It is important to note that both IFTA and fuel tax permits apply only to vehicles with a gross vehicle weight rating (GVWR) of 26,000 pounds or more, or those with three or more axles. Lighter vehicles or non-commercial operations generally do not need to obtain either type of permit.
