The International Fuel Tax Agreement (IFTA) is a base-state agreement among U.S. states and Canadian provinces that simplifies the reporting of fuel taxes by interstate motor carriers. Calculating fuel taxes under this agreement involves determining the total miles traveled in each jurisdiction and multiplying those distances by the jurisdiction’s fuel tax rate. For instance, if a vehicle travels 1,000 miles in a state with a fuel tax rate of $0.30 per gallon and consumed 100 gallons of fuel, the fuel tax due for that state would be $30.00.
Adhering to the provisions of this agreement reduces administrative burdens for motor carriers operating across multiple jurisdictions. Prior to its implementation, carriers were required to obtain permits and file fuel tax reports in each individual jurisdiction traveled. This agreement streamlines the process, allowing carriers to file a single quarterly return with their base jurisdiction. The fuel taxes are then distributed to the relevant jurisdictions based on the mileage driven in each.