IRS Form 4136 (Schedule A) – IRS Forms, Instructions, Pubs 2026

IRS Form 4136 (Schedule A) – IRS Forms, Instructions, Pubs 2026 – Businesses that consume large volumes of gasoline, diesel, kerosene, or alternative fuels in qualifying nontaxable activities can recover federal excise taxes through IRS Form 4136. Schedule A (Form 4136), the Business Activity Report, provides the detailed breakdown required when multiple activities qualify. This credit can deliver meaningful tax savings or refunds for industries like construction, agriculture, transportation, and exporting.

This SEO-optimized guide explains eligibility, step-by-step filing, recent 2025 updates, recordkeeping, and common pitfalls, based on current IRS instructions and forms.

What Is IRS Form 4136?

Form 4136, titled Credit for Federal Tax Paid on Fuels, lets eligible taxpayers claim credits for federal excise taxes paid on fuels used in nontaxable ways or for specific alternative fuels. Taxpayers attach it to their income tax return (e.g., Form 1040, 1120, 1065).

Eligible claims include:

  • Nontaxable uses (off-highway business use, farming, trains, certain buses, exports).
  • Sales by registered ultimate vendors to governments or nonprofits.
  • Blending diesel-water fuel emulsions.
  • Limited alternative fuel uses (some credits expired post-2024).

The form calculates credits by fuel type, use, and gallons, then applies the total against income tax liability.

What Is Schedule A (Form 4136) – Business Activity Report?

Schedule A is the Business Activity Report for Credit for Federal Tax Paid on Fuels. It details each qualifying business activity when you have more than one.

  • Use a separate Schedule A for each distinct business activity or EIN.
  • Aggregate totals from all Schedule As into Form 4136 Part II.
  • On Form 4136 Part I, report details for the single activity that generates the most credit (or most fuel usage).

Key fields on Schedule A:

  • Business name and EIN (if applicable).
  • Principal Business Activity Code (six-digit NAICS-like code).
  • Equipment details for the asset using the most fuel: Make, Model, and Type (e.g., excavator, combine harvester).

Schedule A includes the same credit calculation tables as Form 4136 Part II, plus required certifications.

Who Should File Form 4136 and Schedule A?

You qualify if you:

  • Owned or operated a business with qualifying fuel use in a qualifying activity.
  • Are the ultimate purchaser of taxed fuels for nontaxable uses.
  • Are a registered ultimate vendor selling to governments, nonprofits, or from blocked pumps.
  • Blend diesel-water emulsions or export dyed fuels/blendstocks.

Common qualifying businesses and activities:

  • Construction, mining, logging (off-highway equipment).
  • Farming and agriculture.
  • Commercial fishing boats.
  • School, intercity, or local buses.
  • Railroads (undyed diesel in trains).
  • Exporters.
  • Governmental or nonprofit organizations (via vendors).

Non-qualifying uses (do not file):

  • Personal use, commuting, or ride-sharing.
  • Fuel in registered highway vehicles (except specific exceptions).
  • On-highway personal or non-business use.

Off-highway business use (Type of Use 2) commonly applies to heavy equipment like excavators and bulldozers.

Qualifying Fuel Uses and Credit Rates (2025 Examples)

The IRS provides a table of Type of Use codes. Common ones include:

  • 1: On a farm for farming purposes.
  • 2: Off-highway business use.
  • 3: Exported.
  • 5: Certain intercity and local buses.
  • 7: School buses.
  • 13/14: Nonprofit educational organizations or state/local governments.

Sample rates (per gallon; check current form for exact figures):

  • Gasoline off-highway business use → $0.183.
  • Undyed diesel farm use or trains → $0.243.
  • Undyed diesel certain buses → $0.17.
  • Exported fuels → Slightly higher (e.g., $0.244 for diesel).
  • Alternative fuels (LPG, CNG, LNG) → Vary by fuel and use (GGE or DGE equivalents apply).

New for 2025: Column (d) requires the actual fuel cost from your records on credit lines. The IRS may request proof during review.

Farm tractors and equipment often qualify for the farm-use credit (Type of Use 1).

How to Complete Schedule A Step-by-Step?

  1. Header and Business Info — Enter name, TIN, business name, EIN, and Principal Business Activity Code. Provide make, model, and type of primary fuel-using equipment.
  2. Certifications — For undyed diesel/kerosene: Certify no visible dye (attach explanation if any dye present). For vendor sales: Confirm tax-excluded pricing, repayment, or buyer consent.
  3. Credit Tables — For each fuel section (gasoline, aviation gasoline, undyed diesel, kerosene, alternative fuels, etc.):
    • Select Type of Use code.
    • Enter rate (pre-printed or from instructions).
    • Report qualified gallons (or GGE/DGE for gases).
    • Enter actual fuel cost (new column).
    • Calculate and enter credit amount.
    • Note the CRN (Credit Reference Number) for IRS processing.
  4. Total — Sum credits on Schedule A and carry to Form 4136.

If multiple activities, repeat for each Schedule A and aggregate on the main form.

Integrating with Form 4136

  • Part I (Information About Your Business): Answer qualification questions. If multiple activities, note the count and detail the largest one.
  • Part II: Aggregate all credits from Schedule A(s). Enter the grand total on your income tax return (e.g., Schedule 3 of Form 1040, line 12).

Recordkeeping and Filing Requirements

Keep records for at least 3 years:

  • Purchase invoices showing seller, date, gallons, and price.
  • Usage logs or allocation methods proving nontaxable use.
  • Export documents (bills of lading, customs forms).
  • Form 637 registration (for vendors).
  • Actual fuel cost documentation.

Filing:

  • Attach Form 4136 (and all Schedule A) to your timely income tax return (including extensions).
  • Some claimants may use Form 8849 for quarterly refunds or Form 720 Schedule C for excise tax offsets.

Important: Include the credit in gross income if you previously deducted the full fuel cost (including tax).

Recent Changes for Tax Year 2025

  • Stronger emphasis on business qualification in Part I.
  • New actual fuel cost column (d) in Part II and Schedule A.
  • Biodiesel/renewable diesel mixture credits and certain alternative fuel credits expired for claims on Form 4136 after 2024 (use Form 720 where applicable).
  • Sustainable Aviation Fuel (SAF) credit limited on this form.

Always download the latest versions from IRS.gov.

Common Mistakes to Avoid

  • Claiming fuel used in registered highway vehicles or for personal/commuting purposes.
  • Missing Form 637 registration for vendor claims.
  • Inaccurate gallon tracking or failure to document actual costs.
  • Forgetting to file separate Schedule A for each business activity.
  • Double-claiming credits already claimed on Form 8849 or 720.
  • Overlooking the perjury declaration and certifications.

Final Tips and Resources

The fuel tax credit via IRS Form 4136 and Schedule A offers real savings for fuel-heavy operations, but accuracy and documentation are essential. Rates, eligibility, and forms can change, so verify details annually.

Official Resources:

For complex situations or large claims, consult a qualified tax professional or CPA familiar with excise tax credits.

By properly using Form 4136 and Schedule A, eligible businesses can turn fuel expenses into valuable tax savings. Review your operations today to see if you qualify.