IRS Form 4136 – Credit for Federal Tax Paid on Fuels – If you’re a business owner, farmer, or individual who uses fuel for nontaxable purposes, you might be eligible for significant tax savings through the IRS Form 4136. This form allows taxpayers to claim a credit for federal excise taxes paid on fuels, potentially reducing your overall tax liability. In this comprehensive guide, we’ll break down everything you need to know about IRS Form 4136, including eligibility, how to file, and updates for tax year 2025. Whether you’re dealing with diesel, gasoline, or alternative fuels, understanding this credit can help you maximize refunds during the 2026 filing season.
What Is IRS Form 4136?
IRS Form 4136, officially titled “Credit for Federal Tax Paid on Fuels,” is a tax form used to claim refunds or credits for federal excise taxes paid on certain fuels when those fuels are used for nontaxable purposes. These excise taxes are typically included in the price you pay at the pump or through suppliers, but if the fuel isn’t used for taxable activities like highway driving, you can recover those costs.
The form covers a wide range of fuels, including gasoline, diesel, kerosene, aviation fuels, and alternative fuels like liquefied petroleum gas (LPG) or compressed natural gas (CNG). It’s designed to provide relief for uses such as farming, off-highway business operations, or certain commercial activities where the fuel tax doesn’t apply. Unlike deductions, which reduce taxable income, this is a direct credit that lowers your tax bill dollar-for-dollar or can even result in a refund if it exceeds your liability.
For tax year 2025, the form has been updated to include new reporting requirements, such as Schedule A for detailing business activities related to the fuel use. This ensures better compliance and verification by the IRS.
Who Can Claim the Fuel Tax Credit on Form 4136?
Not everyone qualifies for the fuel tax credit. Eligibility depends on your fuel use and business type. Generally, you can claim the credit if:
- You use fuel for nontaxable purposes, such as off-highway business (e.g., construction equipment), farming, or commercial fishing.
- You’re a registered ultimate vendor selling fuel for nontaxable uses.
- You operate certain buses, trains, or aviation services where reduced rates apply.
- You use alternative fuels in qualifying ways.
Common eligible users include:
- Farmers using fuel for agricultural equipment.
- Businesses with off-road vehicles or machinery.
- Local governments or schools for buses.
- Aviation operators for non-commercial flights.
If you’re an individual without a qualifying business, you typically cannot file Form 4136 unless you meet specific exemptions outlined in the instructions. Always check if your fuel was undyed (for diesel and kerosene claims) and ensure you haven’t waived your right to claim the credit.
For tax year 2025, the IRS emphasizes verifying business activities. If you answer “Yes” to having a qualifying business on Part I of the form, you must attach Schedule A (Form 4136) for each activity, providing details like EIN, principal business code, and equipment descriptions.
Types of Fuel Credits Available on Form 4136
Form 4136 is divided into sections for different fuels and uses, each with specific rates and Credit Reference Numbers (CRNs) for reporting. Here’s a breakdown of key categories based on the 2025 form:
1. Nontaxable Use of Gasoline
- Off-highway business use or farming: $0.183 per gallon (CRN 362).
- Other nontaxable uses: $0.183 per gallon.
- Exported: $0.184 per gallon (CRN 411).
2. Nontaxable Use of Aviation Gasoline
- Commercial aviation (non-foreign trade): $0.15 per gallon (CRN 354).
- Other nontaxable: $0.193 per gallon (CRN 324).
- Exported: $0.194 per gallon (CRN 412).
- LUST tax on foreign trade: $0.001 per gallon (CRN 433).
3. Nontaxable Use of Undyed Diesel Fuel
- Claimants must certify no visible dye (or explain if present).
- Nontaxable or farming use: $0.243 per gallon (CRN 360).
- Trains: $0.243 per gallon (CRN 353).
- Intercity/local buses: $0.17 per gallon (CRN 350).
- Exported: $0.244 per gallon (CRN 413).
4. Nontaxable Use of Undyed Kerosene (Non-Aviation)
- Similar dye certification required.
- Nontaxable taxed at $0.244: $0.243 per gallon (CRN 346).
- Intercity/local buses: $0.17 per gallon (CRN 347).
- Exported: $0.244 per gallon (CRN 414).
5. Kerosene Used in Aviation
- Commercial aviation taxed at $0.244: $0.200 per gallon (CRN 417).
- Nontaxable taxed at $0.244: $0.243 per gallon (CRN 346).
- LUST tax: $0.001 per gallon (CRN 433).
Alternative Fuels and Other Credits
- Section 11 covers alternative fuels like LPG ($0.183, CRN 419) or liquefied natural gas ($0.243, CRN 420).
- Sales by registered vendors (sections 6-8) allow credits for undyed diesel/kerosene sold to governments or buses.
- Additional sections for diesel-water emulsions, blending, and exported dyed fuels.
Use the form’s tables to calculate credits by multiplying gallons by the rate, then sum them in column (e).
| Fuel Type | Example Use | Rate per Gallon | CRN |
|---|---|---|---|
| Gasoline (Off-Highway) | Construction Equipment | $0.183 | 362 |
| Diesel (Farming) | Agricultural Tractors | $0.243 | 360 |
| Kerosene (Aviation) | Commercial Flights | $0.200 | 417 |
| LPG (Alternative) | Forklifts | $0.183 | 419 |
How to File IRS Form 4136: Step-by-Step Guide?
Filing Form 4136 requires attaching it to your income tax return (e.g., Form 1040, 1041, 1120). Here’s how:
- Gather Records: Collect invoices showing fuel purchases, including seller details, dates, gallons, and costs. Track usage by type (e.g., farming vs. off-highway).
- Complete Part I: Indicate if you have a qualifying business and attach Schedule A if needed.
- Fill Out Credit Sections: Enter gallons, rates, and calculate amounts for applicable lines. Include certifications for dye, waivers, and sales.
- Total the Credit: Sum all credits on line 17 and transfer to your tax return (e.g., Schedule 3, line 12 for individuals).
- Attach to Return: File with your main tax form. For e-filing, note delays for 2025 returns.
If claiming over $750, you may need to file Form 8849 for refunds instead. Always use the latest form edition for 2025.
Required Documentation and Record-Keeping
To support your claim, maintain:
- Proof of ownership for vehicles/equipment.
- Invoices with fuel details (gallons, price, taxes paid).
- Logs of fuel usage by type and purpose.
The IRS may audit claims, so retain records for at least three years. For farmers, see Publication 225 for additional guidance.
Recent Changes and Updates for Tax Year 2025
For 2025 filings in 2026:
- E-filing for returns including Form 4136 starts February 22, 2026, to allow system updates.
- New Schedule A requires detailed business reporting, replacing last year’s Fuel Tax Credit Statement.
- Updated rates and eligibility confirmations emphasize compliance.
Check IRS Publication 510 for excise tax details.
Filing Deadlines and Tips for Success
File by your tax return deadline (April 15, 2026, for most individuals). Extensions apply, but payments are due on time. Tips:
- Use tax software like TurboTax or TaxAct for calculations.
- Consult a tax professional if dealing with multiple activities.
- Avoid common errors like mismatched gallons or missing certifications.
Conclusion
IRS Form 4136 offers valuable savings for those paying federal fuel taxes on nontaxable uses. By understanding eligibility, gathering proper documentation, and staying updated on 2025 changes, you can confidently claim this credit. For the most accurate advice, visit the IRS website or consult a tax expert. Start reviewing your fuel records today to ensure you’re not leaving money on the table during the 2026 tax season.