Diesel price versus cost, or whose $20 is that?

[LDB]

You will owe taxes on the money because less expense equals more income. If you are in the 15% bracket you owe $3 out of each $20 you pocket. If you happen to be at a point where an extra $1000 from fuel tax savings pushes you one bracket higher I don't know what the net effect would be. I'd say then it's time to figure out another expense not listed or charitable contribution made or put a little more in an IRA or whatever to drop back the hundred or two that pushed you over. It is definitely more work but worth it in the long run I think.

Leo Bricker, 73's K5LDB, OOIDA 677319
Owner, Panther trucks 5507, 5508, 5509
Highway Watch Participant, Truckerbuddy
EO Forum Moderator
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Support the entire Constitution, not just the parts you like.

[gandrew]

A great reminder, thanks. We are in Portland Oregon, where today diesel is $2.71. There is no tax advantage to buying fuel here even if it is cheaper. PLUS we get charged 13 cents a mile tax to drive on their roads!! Figure 9 mpg and add that to the fuel and it's way expensive, plus we would be driving in surrounding states with full tanks so we will owe more for that driving too. Oregon is very not truck friendly.

[Falligator]

OIL COMPANIES WILL GET MONEY AND THE GOVERNMENT WILL GET THEIRS TOO! I once heard that big oil revenues equal about 1,300$ per SECOND! too bad i didn't win that 300 million dollar powerball!


I once seen a bumper sticker that read,
"Don't steal the government hates competition." lol

[pjjjjj]

I should have mentioned that only applies to D and E units. For B and C units the only key is checking the wholesale price at T/A to see if it's a good place to stop.

Thanks for the great info! Wow, it DOES make one's head spin!
Of course, I have some questions..
How often, (if ever?), do these tax rates change? Are they something needing to be checked on a daily basis, monthly, yearly?
When you say it ONLY applies to D and E units, does that mean C units *can't* do this reporting (if it were to their advantage to do so), or that they don't *have* to do this reporting?
The carrier husb is with, asks for copies of all gas receipts, and he was told they would do the fuel tax reporting on his behalf, and that he would be getting refunds quarterly; i)we have not seen any evidence of any reporting as of yet (he has been with them since beginning of Oct07); ii)he has a C-Unit, so why do they want them in the first place?
Are there any other rules for when you Americans come into Canada?
Thanks for posting such an informative post.. I'm assuming the information is still relevant even if the numbers may have changed since you posted it!

[DreamTeam44]

In Kentucky, Oregon, and a couple other states I think Idaho they wait until the end of the Month/Quarter because they charge you a mileage tax rather than a fuel tax.

On our settlements all the FICA taxes are figured, when we first noticed the mileage tax back then we called to inquire.

I don't have a settlement in front of me now or I could be more precise in my facts.

Sorry, this 'ol mind and this 'ol body ain't what it used to be!

[LDB]

I don't know about Canada. Here only vehicles 26,001 and over have to report. C units generally fall below that so they don't report. I can't find my link right now but the current rates may be available on dieselboss.com or Kevin Rutherford's site but I don't remember the name of it.

[greg334]

On our settlements all the FICA taxes are figured, when we first noticed the mileage tax back then we called to inquire.

You're an employee and paying fuel taxes?

[SHARP327]

Thanks Leo!

You've done a real good job explaining how the fuel taxes work...But...I have a problem in worring about who does what and why.

My reasoning is this...my thought is fuel and fuel taxes are a cost of doing business which I think are a 100% write off when doing my income taxes and if I receive a credit on my settlement it shows up in the income column which I'll end up paying taxes on again, even when I receive my rebate from Pilot it shows up as income as well and that's why I avoid using Pilot.

I'm not saying that you're wrong...I'm just saying that I've got alot of other issues to worry about and come the end of the year if I haven't used the money in fuel, taxes, maint and repairs and what ever else comes along then I'll have to give it to Uncle Sam.

Having said this I'd also like to say that if I'm wrong about the taxes being a complete write off then I stand corrected and I'll consider worring about how to calculate the fuel tax thing.

Thanks Leo!

[jaminjim]

You're an employee and paying fuel taxes?

Where did you come up with him being an employee?

[LDB]

This is my understanding and as my better half often reminds me is subject to being better understood. We deduct the entire amount of fuel purchased so we are getting a deduction on the fuel tax portion of the purchase. The fuel tax portion of the purchase goes into an imaginary piggy bank. Each time we buy fuel, money goes into the pig. Each state we drive in reaches into the pig at the end of the quarter to take out a set amount per gallon burned in that state. Where we buy is the factor determining how much is in the pig. If there isn't sufficient money in the pig then they reach into our pocket for the rest. If there's more than they need then we have a little surplus in the pig for the next quarter. Income taxes don't affect the pig. It is the temporary repository of fuel tax funds awaiting distribution to the states. Back to my GA/FL example. The purchase of 100 gallons has a net impact of $16.47 on the balance in the pig. It costs $8 more at the pump to create that $16.47 in the pig so we're ahead $8.47.

Pilot vs others. I don't know what tax bracket you're in so I'm going to use 25% since it works well with coins. Say your choices are Pilot or X or Y and Pilot has the best price. You could save $2 on your fuel purchase if you used Pilot over X. You'll get a rebate of that $2 and out of those 8 quarters uncle Sam decides to grab 2 of them. You're still ahead by 12 bits (6 quarters for those who aren't familiar with bits). Yes, it's double dipping but it still makes a net gain in my pocket.

Oh, a final thought on the fuel tax thing. Last quarter they dipped into my pocket for $5.87 and they dipped into the pockets of the 3 other drivers I know about for $134, $151 and $188. I don't suggest folks are going to make money this way, just that they're going to keep more of what they've previously made. It's some nuisance but I figure it's worth about $500 a year to a solo, maybe more and probably could be close to $100 a month for teams.

[LDB]

Only employees are subject to FICA but let's keep this strictly to fuel tax and start another thread for that if need be. Thanks.

[pjjjjj]

We deduct the entire amount of fuel purchased so we are getting a deduction on the fuel tax portion of the purchase. The fuel tax portion of the purchase goes into an imaginary piggy bank. Each time we buy fuel money goes into the pig. Each state we drive in reaches into the pig at the end of the quarter to take out a set amount per gallon burned in that state. Where we buy is the factor determining how much is in the pig. If there isn't sufficient money in the pig then they reach into our pocket for the rest. If there's more than they need then we have a little surplus in the pig for the next quarter. Income taxes don't affect the pig. It is the temporary repository of fuel tax funds awaiting distribution to the states.

Wow, now it almost sounds similar to our GST reporting now that you put it that way! Thanks for making it into a much easier to understand scenario!

[greg334]

Only employees are subject to FICA but let's keep this strictly to fuel tax and start another thread for that if need be. Thanks.

NO lets not start another thread, just a quick answer is good enough for my curiosity.

If they are employees, than FICA is paid, I just asked if they are.

[TSexpediter]

There is one problem in Leo's calculation. He's mixing apples with oranges.
In order to compare the two situations - buying gas in FL or GA - and to get an accurate result, you MUST consider that you buy the SAME amount of gas in each state.
And I'll prove that not the fuel tax makes the difference.

Here are the numbers (I used the same, not actual rates):

FL: 117gal x 2.919 = $341.52
117gal x 0.3057 = $35.76 fuel tax paid at purchase
GA: 117gal x 2.829 = $330.99
117gal x 0.141 = $16.49 fuel tax paid at purchase

Now the tax owed is the same no matter where you buy fuel: $14.91 for FL and 6.78 GA

Assuming we stop after these transactions here's what left our pockets:

FL: $341.52 paid on gas minus credit to be received (35.76-14.91-6.78) = $327.45
GA: $330.99 plus tax owed (14.91+6.78-16.49) = $336.19

So paying in GA lest us short $8.74. And guess where the difference is comming from:
FL: $2.919/gal - $0.3057tax/gal = $2.6133
GA: $2.829/gal - $0.141tax/gal = $2.688
diff = $0.0747 x 117 gal purchased = $8.74

Of course we pay more if we decide to buy fuel in the states where the NET fuel cost is higher. But who keeps a spreadsheet os the fuel tax for each state in his pocket and researches online prices every day and deducts the tax to get to the NET cost???

Now it's a different story for states where the purchase tax is different then filing tax.

[LDB]

Agreed, you wouldn't be able to buy the same amount of fuel since you'll burn some getting into GA that you can't then buy in FL. That aside, the pricipal is the same. You get .yy credit for each gallon purchased at the pump wherever you buy it. You owe the state .xx tax for each gallon burned in the state. The more .yy you can put into your fuel tax piggy bank the less they'll be reaching into your pocket. The principal works regardless of quantity purchased.

I know of a few folks who have the fuel tax chart taped inside their logbook and do plan their fuel purchases. Most don't put that much effort into it.