How will fuel tax apply to companies using alternative fuels since the company won't be using gas or paying a typical gas tax?

With more states charging fuel taxes on electric vehicles (EVs), motor carriers must know how to report operations of electric-powered qualified motor vehicles in their fleets.

Various alternative fuels – including electricity – must be reported on tax returns under the International Fuel Tax Agreement (IFTA). Indiana is the latest to embrace the trend, while also adding a new twist.

Previously, three states taxed electricity as a fuel – Iowa, Pennsylvania, and Wyoming. These three jurisdictions impose tax on electricity consumed in qualified motor vehicles by applying a tax rate to the net taxable fuel – kilowatt hours (kWh).

During 2023, Indiana expanded its fuel use tax laws under IFTA to include a tax on qualified alternative fueled vehicles, notably those powered by electricity. The twist? Indiana imposes that tax by applying a tax rate to the taxable distance in the state. The new requirement went live beginning January 1, 2024.

With more states taxing electric vehicles under IFTA, carriers must understand how to report operations of electric-powered qualified motor vehicles to correctly calculate taxes and credits due. The bottom line is that they are still subject to IFTA, but the reporting details vary by state. Once their account is created, the required information for qualified vehicles will need to be included in their quarterly reports to their base state. They should track mileage and fuel expenses the same as they would for gas- or diesel-fueled units.