IRS Pub 510 – Excise Taxes

IRS Pub 510 – Excise Taxes – In the complex world of federal taxation, excise taxes play a crucial role in funding specific government programs and regulating certain industries. If you’re a business owner, manufacturer, fuel distributor, or anyone dealing with taxable goods and services, IRS Publication 510 is an essential resource. This comprehensive guide breaks down everything you need to know about IRS Pub 510 – Excise Taxes, including its coverage, recent updates, filing requirements, and more. Whether you’re researching fuel tax credits, environmental taxes, or manufacturers’ taxes, this article provides clear, actionable insights based on the latest official information.

What Is IRS Publication 510?

IRS Publication 510, officially titled “Excise Taxes (Including Fuel Tax Credits and Refunds),” is a detailed IRS document that outlines federal excise taxes imposed on various goods, services, and activities. These taxes are typically reported on Form 720 and related forms, and they fund initiatives like environmental protection, transportation infrastructure, and health research. The publication is designed for taxpayers who may be liable for these taxes, such as fuel producers, importers, airlines, manufacturers, and retailers.

Excise taxes differ from income taxes as they are levied on specific transactions, productions, or uses rather than overall earnings. Common examples include taxes on gasoline, diesel fuel, air transportation, and certain chemicals. Pub 510 explains taxable events, rates, exemptions, and how to claim credits or refunds for nontaxable uses. It’s regularly updated to reflect legislative changes, with the current revision dated December 2025 for use in 2026.

The guide is not exhaustive for all excise taxes—topics like alcohol, tobacco, firearms, and wagering are covered elsewhere (e.g., by the Alcohol and Tobacco Tax and Trade Bureau or Form 730). However, it serves as the go-to reference for most Form 720-related liabilities.

Key Sections and Topics Covered in Pub 510

IRS Pub 510 is structured into chapters that cover a wide range of excise taxes. Here’s an overview of the main areas:

1. Fuel Taxes

This is one of the largest sections, detailing taxes on gasoline ($0.184 per gallon), diesel and kerosene ($0.244 per gallon), aviation fuels, alternative fuels like compressed natural gas (CNG), and more. It explains taxable events such as removal from terminals, imports, or sales, and identifies liable parties like position holders or importers.

  • Dyed vs. Undyed Fuels: Dyed fuels (e.g., with Solvent Red 164) are exempt for nontaxable uses like farming or off-highway business, but misuse triggers penalties.
  • Inland Waterways and Other Fuels: Taxes apply to fuels used in commercial vessels, with exemptions for fishing or deep-draft ocean vessels.

2. Fuel Tax Credits and Refunds

If you’ve paid excise tax on fuel used nontaxably, you can claim credits or refunds. Pub 510 lists 16 nontaxable uses, including farming, exports, government vehicles, and aviation in foreign trade. Claims are filed via Forms 4136, 8849, or 8864, often requiring certificates and recordkeeping.

  • Biodiesel and Renewable Fuels: Details on blender credits, though many expired after 2024 unless extended.
  • Aviation Kerosene: Reduced rates for commercial use ($0.044 per gallon) and specifics for flash title transactions.

3. Environmental Taxes

These fund Superfund and oil spill liability programs. Key taxes include:

  • Petroleum taxes: $0.09 per barrel for oil spills plus $0.18 per barrel (inflation-adjusted) for Superfund, ending December 31, 2025, unless extended.
  • Chemical taxes: Reinstated in 2022, covering ozone-depleting chemicals (ODCs) and imported substances.
  • Floor stocks tax: Applies to ODCs held on January 1.

Exemptions exist for exports, recycled materials, and feedstock uses.

4. Communications and Air Transportation Taxes

  • Communications: 3% on local telephone and teletypewriter services, with exemptions for bundled services, governments, and nonprofits.
  • Air Transportation: 7.5% on fares, plus inflation-adjusted domestic segment fees ($5.30 in 2026) and international facilities taxes ($23.40). Exemptions for military, rural airports, and certain helicopters.

5. Manufacturers, Retail, and Other Taxes

  • Manufacturers Taxes: Cover sport fishing equipment (10%), bows and arrows, coal, tires, gas guzzlers, and vaccines ($0.75 per dose).
  • Retail Taxes: 12% on heavy trucks and trailers over 33,000 lbs GVW.
  • Other: Ship passenger tax ($3 per passenger), foreign insurance premiums, indoor tanning (10%), patient-centered outcomes research fees, stock repurchases (1%), and new remittance transfers (1% after December 31, 2025).

The appendix includes model certificates (A-T) for exemptions and claims, essential for compliance.

Recent Updates for 2026 in IRS Pub 510

The December 2025 revision incorporates changes from the One Big Beautiful Bill Act (OBBBA) of 2025, enacted July 4, 2025. Key updates include:

  • Expired Credits: Biodiesel, renewable diesel, and alternative fuel credits ended after 2024; sustainable aviation fuel (SAF) credit terminates September 30, 2025.
  • New Excise Remittance Tax: 1% on certain monetary remittances starting January 1, 2026, with penalty relief for 2026 quarters.
  • Inflation Adjustments: Air transportation segment tax at $5.30; Superfund petroleum tax at $0.18 per barrel.
  • Dyed Fuel Refunds: Forthcoming guidance under section 6435 for refunds on dyed diesel or kerosene; hold claims until early 2026.
  • Agri-Biodiesel: Extended small producer credit through 2026; must use North American feedstock after June 30, 2025.
  • Oil Spill Liability Trust Fund: Expires after 2025 unless extended.

Disregarded entities (like QSubs) are treated separately for excise taxes, and electronic filing is encouraged. For aviation-specific updates, resources like the NBAA Federal Excise Taxes Guide reflect 2026 rates.

How to File and Pay Excise Taxes

Filing is quarterly on Form 720, with due dates on the last day of the month following each quarter (e.g., April 30 for Q1). Deposits are semimonthly via EFTPS, with safe harbor rules allowing 1/6 of the prior quarter’s liability.

  • Registration: Use Form 637 for activities like blending or vending; failure incurs $10,000 penalties plus $1,000 per day.
  • Recordkeeping: Retain records for 3-7 years, including purchase dates, gallons, and certificates.
  • Penalties: Up to 100% trust fund recovery for willful failures; interest on late payments.

For refunds, attach schedules to Form 720 or use standalone forms like 8849. Always check IRS.gov for forms and electronic options.

Exemptions, Credits, and Refunds

Pub 510 emphasizes exemptions to avoid overpayment. Common ones include exports, government use, nonprofits, and further manufacturing. Require proof like bills of lading or model certificates.

  • Nontaxable Uses: For fuels, claim via ultimate purchaser or registered vendor.
  • Credits: One per fuel amount; include in income if deducted as expense.
  • Special Rules: No deposits for most manufacturers’ taxes; alternative deposit methods for air and communications taxes.

Download IRS Pub 510

To access the full details, download the official PDF version of IRS Publication 510 directly from the IRS website: https://www.irs.gov/pub/irs-pdf/p510.pdf. This ensures you have the most current revision for 2026 compliance.

Conclusion

IRS Publication 510 is indispensable for navigating excise taxes, helping you understand liabilities, claim refunds, and stay compliant in 2026. With updates from the OBBBA and inflation adjustments, reviewing the latest version is key to avoiding penalties. For personalized advice, consult a tax professional or use IRS resources like the Taxpayer Advocate Service. Stay informed by visiting IRS.gov for future developments.