What Is Fuel Excise Tax and Who Has to Pay It?
Every time fuel moves from a refinery to a terminal, or crosses into the US at a port, someone owes the federal government money on it. That's fuel excise tax in a nutshell. But the rules around who owes it, how much, and when it gets reported trip up a lot of businesses, especially ones that only recently started dealing with bulk fuel. This piece covers what is fuel excise tax at a practical level: the rates, who is on the hook, and how it connects to Form 720, Form 8849, and the PCORI fee.
What Is Fuel Excise Tax, Exactly?
Fuel excise tax is imposed under Internal Revenue Code Section 4081 on gasoline, diesel, kerosene, and a handful of other taxable fuels. It's not a percentage of price the way sales tax is. It's a flat rate per gallon, and it kicks in at specific moments: when fuel leaves a terminal rack, when it's imported into the US, or when it's sold or used in a way the IRS treats as taxable.
If you're looking for the short answer, fuel excise tax is a per-gallon charge collected primarily from the fuel industry rather than from people filling up at the pump. Most of the revenue collected goes into the Highway Trust Fund to help pay for road and bridge projects.
Fuel Types and Current Rates
Each fuel category gets its own IRS number and rate. Here's a breakdown of the most common ones.
| Fuel Type | IRS Number | Approx. Federal Rate |
|---|---|---|
| Gasoline | 62 | 18.4 cents per gallon |
| Diesel Fuel | 60 | 24.4 cents per gallon |
| Kerosene | 35 | 24.4 cents per gallon |
| Aviation Gasoline | 14 | 19.3 cents per gallon |
| Kerosene for Aviation | 69/77 | 21.9 to 24.4 cents per gallon |
| Liquefied Petroleum Gas (LPG) | 112 | 18.3 cents per gallon equivalent |
| Compressed Natural Gas (CNG) | 120 | 18.3 cents per gasoline gallon equivalent |
These rates move occasionally, so check them against the current Form 720 instructions before you file rather than trusting a table you found online, including this one.
Who Actually Has to Pay It
This is where a lot of confusion comes in. Liability sits with whoever is closest to production or import, not with retail buyers. You probably owe fuel excise tax if you're any of the following.
- A refiner, terminal operator, or bulk distributor pulling taxable fuel off a terminal rack
- An importer bringing gasoline, diesel, or kerosene into the country
- A blender mixing biodiesel, ethanol, or similar additives into taxable fuel
- An airline or aviation fuel supplier
- A registered ultimate vendor selling dyed diesel or kerosene without the paperwork to back an exemption
If you run a gas station and just sell fuel to drivers, you're generally not the one filing. The tax is already baked into what you paid your supplier. But if your business falls into one of the categories above, quarterly filing on Form 720 is expected of you, and our Fuel Excise Tax Filing service is built around exactly this group.
How It Gets Reported
Form 720, the Quarterly Federal Excise Tax Return, is where fuel excise tax gets reported alongside other federal excise taxes like the environmental tax, air transportation tax, and the PCORI fee. Here's how the related forms fit together.
| Form | Purpose | Filing Frequency |
|---|---|---|
| Form 720 | Reports fuel excise tax and other federal excise taxes | Quarterly |
| Form 720 PCORI (Part II, IRS No. 133) | Reports the Patient Centered Outcomes Research fee for self insured plans | Annually, filed with Q2 Form 720 |
| Form 720-X | Corrects a previously filed Form 720 | As needed |
| Form 8849 | Claims a refund on excise tax already paid | As needed |
Our File IRS Form 720 Online platform walks you through each IRS number that applies and calculates the liability for you, so you're not doing the math by hand.
Where the PCORI Fee Fits In
The PCORI fee isn't a fuel tax, but it gets reported on the same 720 pcori form, which is probably why people mix the two up. If your business sponsors a self insured health plan or an HRA, you report that fee separately under IRS Number 133 on your Q2 return. It has nothing to do with how much fuel you moved that quarter. Our File PCORI Fee Online service handles that piece on its own, which matters if your business happens to owe both.
Getting a Refund with Form 8849
Fuel used for farming, certain off highway equipment, exports, or other nontaxable purposes can qualify for a refund on tax already paid. You don't amend the original Form 720 for this. You file the 8849 form instead, choosing the schedule that matches your situation, whether that's nontaxable fuel use, sales by registered ultimate vendors, or an alternative fuel credit. You can file through our File Form 8849 Online service, and if you're not sure which of the two forms applies to you, our Form 720 vs Form 8849 page breaks down the difference without the jargon.
2026 Filing Deadlines
Form 720 runs on a strict quarterly schedule, and missing one means penalties and interest start piling up.
- Q1 (January to March): due April 30
- Q2 (April to June): due July 31
- Q3 (July to September): due October 31
- Q4 (October to December): due January 31, 2027
Already past a due date? Our Form 720 Late Filing guide covers what happens next and what penalty relief might look like.
Filing Without the Paperwork Headache
You don't need software installed or a stack of paper forms to get this done. eFileExcise720 is an IRS authorized e-file provider, so you set up a free account, enter your gallons and IRS numbers, review what the system calculates, and send it to the IRS directly. Pricing for a quarterly return is listed on our Pricing page if you want the numbers before you start.
Common Questions
What is fuel excise tax used for?
Mostly road and bridge work. Most of it goes to the Highway Trust Fund.
Who pays it, the fuel company or the driver?
Legally, it's the refiner, importer, blender, or terminal operator who reports and remits it. Drivers pay it indirectly through the price at the pump.
Is this the same thing as sales tax?
No. Sales tax scales with price. Fuel excise tax is a flat cents per gallon amount regardless of what fuel is selling for.
Form 720 or Form 8849, which one do I need?
Form 720 is for reporting and paying what you owe. Form 8849 is only for claiming money back on tax you already paid for nontaxable use.
How often does Form 720 need to be filed?
Every quarter, due on the last day of the month following the quarter's end.
Is the PCORI fee part of fuel excise tax?
No, they're separate liabilities that just happen to share the same form.
Bottom Line
Knowing what is fuel excise tax, whether it applies to your business, and how it ties into Form 720, Form 8849, and the PCORI fee keeps you out of penalty territory. If you're ready to file, eFileExcise720 gives you one authorized platform to handle all three without juggling separate tools.