New Tax Change: Fuel Tax Credit Statement

The Internal Revenue Service (IRS) recently released an announcement regarding a few changes for the 2025 filing season. One of those changes relates to a new statement that must be included with individual tax filings when claiming a fuel tax credit. It will be important to confirm this information is reported, if applicable, to avoid any delays in receiving the credit.

The IRS has provided the following guidance:

Who Should File the New Statement?

Individuals filing Form 1040, U.S. Individual Income Tax Return, for tax year 2024 who claim nontaxable use of gasoline, aviation gasoline, undyed diesel fuel or undyed kerosene on Form 4136, Credit For Federal Tax Paid On Fuels.

Where Is the New Statement Located?

“Statement Supporting Fuel Tax Credit (FTC) Computation – 1” is located in the instructions for Form 4136 for tax year 2024. The statement should be completed and attached to Form 1040 with Form 4136.

What Information Is the Statement Asking For?

The statement asks for the business information, including name and Employer Identification Number or EIN (if applicable), and make, model and type of machinery or vehicle for which the fuel was purchased. The taxpayer will also be required to complete a table to show the relationship between the estimated purchase price of the fuel compared to the actual cost and gallons reported as being purchased on Form 4136. The IRS used Gasoline and Diesel Fuel Update – U.S. Energy Information Administration (EIA), when determining the average price of fuel for the year.

Should Documentation To Support the Claim Be Included With the Statement? 

No. Taxpayers should not include any receipts or explanation with their tax return but maintain them with their books and records for their tax return. Taxpayers may be asked at a later time to submit proof, such as receipts, of the actual costs paid for each fuel type.

What Happens if the Fuel Tax Credit Is Claimed Erroneously?

Claims and filings that are based upon a position identified as frivolous by the IRS or reflect a desire to delay or impede tax administration are subject to the Internal Revenue Code (IRC) 6702(a) penalty. This penalty is $5,000 for each return (or copy of return) claiming an improper credit as defined above. The penalty is assessed against each spouse on a married filing joint return. (Notice 2010-33)

Maximize Fuel Tax Credit Opportunities

It is always advised that taxpayers consult with their tax advisor to analyze their unique fact pattern in determining eligibility of any credits. For general guidance, please refer to KSM’s Common Transportation Fuel Tax Credits summary to identify the most common fuel tax credits taken in the industry and better understand ways to procure them.

If you have questions about the new fuel tax credit statement or the credit itself, please contact a KSM advisor via the form below.