IRS Form 4136 is the form you attach to your annual income tax return to claim a refundable credit for the federal excise tax you paid on fuel that was used off-highway or for another qualifying nontaxable purpose. Because the credit is refundable, you get the money back even if you owe no income tax. Farmers, construction contractors, commercial fishing operators, transit and school bus operators, and state and local governments are the typical filers, but any taxpayer who burned federally taxed fuel for an exempt use can claim it.
Who Can Claim the Credit
The common thread across every qualifying use is that the fuel did not power a vehicle on public roads. Personal driving never qualifies, even in a truck you also use on the farm. The credit only reaches the gallons burned in a qualifying off-road or exempt activity.
- Farm use. Fuel burned in tractors, combines, irrigation pumps, grain dryers, and similar equipment used on a farm for farming purposes. Highway travel between farms or to market does not count.
- Off-highway business use. Generators, excavators, forklifts, and other equipment that stays on a job site. Construction and manufacturing operations are the heaviest filers in this category.
- Commercial fishing vessels. Fuel used in a boat engaged in commercial fishing qualifies for a full refund of the excise tax paid.
- Buses. Certain intercity, local transit, and school bus operations have dedicated credit lines on the form.
- Nonprofit and government use. State and local governments and certain nonprofit educational organizations can recover excise tax they paid. Government entities without income tax liability receive a direct payment rather than a credit against tax.1eCFR. 26 CFR 48.6427-1 – Credit or Payments to Purchaser of Special Fuels
- Aviation. Fuel used in non-commercial aircraft that is not subject to the higher commercial rate can generate a credit at the applicable rate.
Which Fuels Qualify and at What Rate
The credit covers every major federally taxed fuel type. Standard gasoline, diesel, and kerosene all qualify when used for an eligible purpose. Aviation gasoline has its own line and its own rate. Alternative fuels are covered too, including liquefied petroleum gas (LPG), compressed natural gas (CNG), and liquefied natural gas (LNG).
For traditional fuels the credit equals the excise tax rate per gallon:2Office of the Law Revision Counsel. 26 U.S. Code 4081 – Imposition of Tax
- Gasoline: $0.184 per gallon
- Diesel fuel and kerosene: $0.244 per gallon
- Aviation gasoline: $0.194 per gallon
Alternative fuels use energy-equivalent measurements, which trips up first-time filers. LPG and CNG credits are based on the gasoline gallon equivalent (GGE); LNG uses the diesel gallon equivalent (DGE). The credit rates on the form differ from the full statutory tax because part of that tax is not refundable. For the 2025 tax year, the credit rates are $0.109 per GGE for LPG, $0.109 per GGE for CNG, and $0.169 per DGE for LNG.3Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025)
Alcohol fuel mixtures and biodiesel mixtures fall under separate provisions. Producers of these mixtures must be registered with the IRS under Section 4101 before claiming the credit.4Office of the Law Revision Counsel. 26 U.S. Code 6426 – Credit for Alcohol Fuel, Biodiesel, and Alternative Fuel Mixtures
How the Math Works
Each fuel type and each use category gets its own line. You cannot lump diesel and gasoline together, and you cannot combine farm-use gallons with off-highway business-use gallons on a single line. Enter gallons and the applicable rate for each combination, then total everything at the bottom.
A construction company that burned 5,000 gallons of diesel in off-road excavators multiplies 5,000 by $0.244 for a credit of $1,220. For alternative fuels, convert first. The IRS example: 10,000 gallons of LPG divided by 1.353 (the gallons-per-GGE conversion factor) gives 7,391 GGEs, multiplied by $0.109 for a credit of $805.62.3Internal Revenue Service. Instructions for Form 4136 and Schedule A (2025)
Records You Need to Keep
The IRS can ask you to prove every gallon. You need two things: proof that you bought the fuel and paid excise tax on it, and proof that you used it for a qualifying nontaxable purpose.
Purchase Records
Keep the original invoice or receipt for every fuel purchase, showing the date, vendor name, fuel type, quantity in gallons, and price per gallon. Credit card statements alone will not do the job because they show a dollar amount but not the gallons or the fuel type. Bulk delivery tickets from fuel distributors usually carry the detail you need.
Usage Logs
When you buy fuel in bulk and split it between highway and off-highway equipment, a usage log is the only way to prove the allocation. For each piece of equipment, record the date, gallons consumed, equipment identification, and what the equipment was doing. A farm using the same diesel tank for a road-registered pickup and a combine needs a log showing which gallons went where. Without one, the IRS has no reason to accept the split.
Retention
Keep receipts, invoices, and usage logs for at least three years from the date you filed the return claiming the credit. If you filed the claim more than two years after paying the tax, retention runs to whichever deadline is longer. Four years from the filing date gives a comfortable margin.5Internal Revenue Service. Recordkeeping
How to File Form 4136 With Your Return
Most filers claim the credit once a year by attaching Form 4136 to their income tax return. For individuals, the total from the bottom of Form 4136 flows to Schedule 3 (Form 1040), Part II, line 12.6Internal Revenue Service. 2025 Schedule 3 (Form 1040) Corporations attach the form to Form 1120. The deadline is the due date of your income tax return, including extensions.
Partnerships are the exception. A partnership does not file Form 4136 itself. Instead, it reports each partner’s share of the fuel credit information on Schedule K-1 (Form 1065), including the gallons by fuel type, the applicable credit rate, and the nontaxable use category. Each partner then claims their allocated share on their own return.7Internal Revenue Service. Instructions for Form 4136 – Credit for Federal Tax Paid on Fuels
Because the credit is refundable, it behaves differently from most credits. If it exceeds your tax liability, the IRS sends you the difference. A farmer who owes $800 in federal income tax and claims a $1,200 fuel credit gets a $400 refund after the credit zeroes out the liability. That makes filing worthwhile even in years with little or no taxable income.8Internal Revenue Service. Fuel Tax Credit
Quarterly Claims as an Alternative
Waiting a full year to recover thousands of dollars in excise tax can strain cash flow. Fuel-intensive operations can file quarterly refund claims instead of waiting for the annual return. Quarterly claims go on Schedule C of Form 720 (Quarterly Federal Excise Tax Return) or, in certain situations, on Form 8849 (Claim for Refund of Excise Taxes) with the appropriate schedule.
Rules vary by fuel type. For alternative fuel credits, the claim must first be taken on Form 720, Schedule C, as a credit against your alternative fuel or CNG tax liability. Only after that step can Form 8849 be used for any remaining refund.9Internal Revenue Service. Schedule 3 (Form 8849) You cannot claim the same gallon on both Form 4136 and Form 8849. Pick one path per gallon and stay on it.
Check the current year’s Form 4136 instructions for the minimum claim amount required for quarterly filing. The threshold varies by fuel type and claim method, the IRS updates the figures periodically, and filing below the minimum gets the claim rejected.
Deadlines and Late Claims
For annual claims, the deadline is the due date of your return, including extensions. Quarterly claims on Form 8849 follow a different calendar, generally due by the last day of the quarter following the quarter in which the fuel was used.
If you missed the credit in a prior year, you still have time. The statute of limitations runs three years from the date you filed the original return, or two years from the date the excise tax was paid, whichever expires later.10Office of the Law Revision Counsel. 26 U.S. Code 6511 – Limitations on Credit or Refund If you filed your 2023 return on April 15, 2024, you have until April 15, 2027 to amend it and add a Form 4136 you originally forgot.
State Fuel Taxes Are Not Included
Form 4136 recovers only the federal excise tax. Most states impose their own fuel taxes and offer a similar refund for off-road use, but state claims go on a separate form filed with the state tax agency, not the IRS. Rates, deadlines, and qualifying uses vary. If you qualify for the federal credit, check with your state’s department of revenue, because the state-level claim is usually available too.