IFTA and Profit Based Fueling Practices

[Electric Chicken]

So I've been fueling in Virginia where it's cheapest. I run minimal miles in PA despite living there.

I have been getting hit for about $100 every quarter because of PA. One or two fill ups more than offsets that $100.

So I probably know how it works now.

 

[389 Hood]

You have to look at the base cost of the fuel in each state. Just because the pump price is cheaper, doesn't mean the raw price is the same. Taxes vary from state to state. You have Federal, state, county, city and municipal taxes added onto the base cost of fuel. I used to have a chart that showed each state and the base costs, then cost with added taxes.

Georgia used to have the least expensive advertised price on fuel and we would many times top off before coming back into Florida. But then it was 600 miles round trip from the Georgia line, down to Ft. Lauderdale and back. Even though being based in Florida, you still had to buy at least as many gallons as to cover the taxable miles driven in the state, based on a 5 MPG average. (That's what it used to be with mechanical engines.) An old time once taught me that if you calculate the miles that you will drive in that state, divide it by the 5 MPG index, you should buy that many gallons to cover the taxes. You also had to buy that same amount of fuel for the trip back through the state because we had to record this on trip tickets that had to be turned into the state every year with a check to cover the deficit or the amount to be refunded back to you.

This was long before IFTA and some states didn't reciprocity with others. You also had to declare anticipated mileages in each state that you indicated in your apportionment of you base plate. That was also a time when you had 5 or 6 plates swinging on the bottom of your bumper and half a dozen tax decals. IFTA made tax payment so much easier as it would take your surplus taxes and apply it to the deficit states. and then you would send your base taxing authority a check to make up any shortfalls in the end costs.

That is why you are ending up with a deficit to PA, because not only are you not buying enough fuel to cover the state mileages, you are overpaying the Virginia taxing authority which may or may not have reciprocity with PA.

 

[Electric Chicken]

You have to look at the base cost of the fuel in each state. Just because the pump price is cheaper, doesn't mean the raw price is the same. Taxes vary from state to state. You have Federal, state, county, city and municipal taxes added onto the base cost of fuel. I used to have a chart that showed each state and the base costs, then cost with added taxes.

Georgia used to have the least expensive advertised price on fuel and we would many times top off before coming back into Florida. But then it was 600 miles round trip from the Georgia line, down to Ft. Lauderdale and back. Even though being based in Florida, you still had to buy at least as many gallons as to cover the taxable miles driven in the state, based on a 5 MPG average. (That's what it used to be with mechanical engines.) An old time once taught me that if you calculate the miles that you will drive in that state, divide it by the 5 MPG index, you should buy that many gallons to cover the taxes. You also had to buy that same amount of fuel for the trip back through the state because we had to record this on trip tickets that had to be turned into the state every year with a check to cover the deficit or the amount to be refunded back to you.

This was long before IFTA and some states didn't reciprocity with others. You also had to declare anticipated mileages in each state that you indicated in your apportionment of you base plate. That was also a time when you had 5 or 6 plates swinging on the bottom of your bumper and half a dozen tax decals. IFTA made tax payment so much easier as it would take your surplus taxes and apply it to the deficit states. and then you would send your base taxing authority a check to make up any shortfalls in the end costs.

That is why you are ending up with a deficit to PA, because not only are you not buying enough fuel to cover the state mileages, you are overpaying the Virginia taxing authority which may or may not have reciprocity with PA.

Working out okay for me. The entire purpose of IFTA is reciprocity so the idea that VA doesn't have it with PA is nonsense.

Owing PA 100 bucks over 3 months but saving thousands at the pump means I'm doing fine.

 

[Electric Chicken]

The IFTA argument makes me think of the morons who waste money on chrome just for the tax deductions.

 

[Mike]

So I've been fueling in Virginia where it's cheapest. I run minimal miles in PA despite living there.

I have been getting hit for about $100 every quarter because of PA. One or two fill ups more than offsets that $100.

So I probably know how it works now.

A very simple way to look at it, using fake numbers to make it easy.

Virginia:
Fuel Costs $3.00/Gallon
Fuel Tax on that fuel is $0.25/Gallon
$3.00-$0.25=$2.75 Net Cost

Pennsylvania:
Fuel Costs $3.00/Gallon
Fuel Tax on that fuel is $0.50/Gallon
$3.00-$0.50= $2.50 Net cost.

Smartest place to buy fuel is Pennsylvania with these numbers, you are saving $0.25/Gallon on fuel.



IFTA costs:

You average 5 miles/Gallon on fuel because you are a super trucker.

You drive 100 miles in each state, you used a total of 40 gallons of fuel or this ifta quarter for the 200 miles.

20 Gallons of fuel used in Virginia = you owe Virginia $5.00
20 Gallons of fuel used in Pennsylvania = you own Pennsylvania $10.00
Total IFTA bill is $15.00

Scenarios

You bought all fuel in Virginia:
$3.00 x 40 = $120
Taxes paid at the pump = $10

In this scenario, you are $10.00 short on paying IFTA, so you have to pay an additional $5.00.
$120 + $5 = $125 in total fuel and IFTA expenses.

or

You bought all fuel in Pennsylvania
$3.00 x 40 = 120
Taxes paid at the pump = $20

In this scenario, You over paid in IFTA by $5.00, so you either get $5.00 back, or a credit, depending on how you IFTA system works.
$120 - $5 (credit or refund) = $115 in total fuel and IFTA expenses.

Buying fuel in Pennsylvania saved you $10

Buying your fuel at the cheapest net price (with fuel tax removed from the cost) is always the best way to purchase fuel. This is true in every possible scenario, every time. It doesn't matter where you run the most miles, as this has zero to do with the equation.

Greencastle PA, fuel cost for me is $4.003, minus fuel tax it is $3.21 ($0.78.5/Gallon fuel tax)
Raphine VA, fuel cost for me is $3.569, minus fuel tax it is $3.261 ($0.30.8/Gallon fuel tax)

Best place to buy fuel out of those two options would be Greencastle, PA (same miles as above, running 150 in Virgina, 50 in PA)

PA
$4.003 x 40 = $160.12
Fuel Tax paid at the pump = $31.40

VA
$3.569 x 40 = $142.76
Fuel Tax paid at the pump = $12.32

You suck at driving, so you still average 5 mpg, LOL.

50 miles in PA = 10 gallons of fuel used = IFTA tax bill of $7.85
150 miles in VA = 30 gallons of fuel used = IFTA tax bill of $9.24
Total IFTA costs = $17.09

Pennsylvania ($14.31 Tax Refund or Credit)
$160.12 - $14.31 = $145.81 Total fuel and IFTA costs

Virginia (Additional $4.77 owed to IFTA)
$142.76 + $.4.77 = $147.53 Total fuel and IFTA costs

$147.53 - $145.81 = $1.72 saved by buying all of your fuel in Pennsylvania, even with a pump price that is $.434/Gallon higher than Virginia



For anyone trying to get their head around IFTA, the scenario comes out the same every time, all the time. Cheapest net fuel price always results in the lowest cost of operation. Pick any fuel locations and do the math.

The hard part comes when you are driving all over the country and not always knowing where you are going to be in the next few days, therefore not always knowing where you are going to be able to buy the cheapest net price fuel.

When you are operating in a specific area, simply find the fuel locations that provide the cheapest net fuel costs and fill up there all the time.

Often times, the cheapest net fuel costs will be found near state lines where the stations with higher fuel taxes are trying to compete with lower fuel tax stations near them in the next state.

 

[Mike]

To add, things that are myths.....

It does not matter if you are paying into IFTA every quarter, or receiving a credit. Neither of these two scenarios has any bearing saving money because neither factor in how much money you paid for fuel and taxes during that quarter to achieve a bill or a credit.

 

[Electric Chicken]

A very simple way to look at it, using fake numbers to make it easy.

Virginia:
Fuel Costs $3.00/Gallon
Fuel Tax on that fuel is $0.25/Gallon
$3.00-$0.25=$2.75 Net Cost

Pennsylvania:
Fuel Costs $3.00/Gallon
Fuel Tax on that fuel is $0.50/Gallon
$3.00-$0.50= $2.50 Net cost.

Smartest place to buy fuel is Pennsylvania with these numbers, you are saving $0.25/Gallon on fuel.



IFTA costs:

You average 5 miles/Gallon on fuel because you are a super trucker.

You drive 100 miles in each state, you used a total of 40 gallons of fuel or this ifta quarter for the 200 miles.

20 Gallons of fuel used in Virginia = you owe Virginia $5.00
20 Gallons of fuel used in Pennsylvania = you own Pennsylvania $10.00
Total IFTA bill is $15.00

Scenarios

You bought all fuel in Virginia:
$3.00 x 40 = $120
Taxes paid at the pump = $10

In this scenario, you are $10.00 short on paying IFTA, so you have to pay an additional $5.00.
$120 + $5 = $125 in total fuel and IFTA expenses.

or

You bought all fuel in Pennsylvania
$3.00 x 40 = 120
Taxes paid at the pump = $20

In this scenario, You over paid in IFTA by $5.00, so you either get $5.00 back, or a credit, depending on how you IFTA system works.
$120 - $5 (credit or refund) = $115 in total fuel and IFTA expenses.

Buying fuel in Pennsylvania saved you $10

Buying your fuel at the cheapest net price (with fuel tax removed from the cost) is always the best way to purchase fuel. This is true in every possible scenario, every time. It doesn't matter where you run the most miles, as this has zero to do with the equation.

Greencastle PA, fuel cost for me is $4.003, minus fuel tax it is $3.21 ($0.78.5/Gallon fuel tax)
Raphine VA, fuel cost for me is $3.569, minus fuel tax it is $3.261 ($0.30.8/Gallon fuel tax)

Best place to buy fuel out of those two options would be Greencastle, PA (same miles as above, running 150 in Virgina, 50 in PA)

PA
$4.003 x 40 = $160.12
Fuel Tax paid at the pump = $31.40

VA
$3.569 x 40 = $142.76
Fuel Tax paid at the pump = $12.32

You suck at driving, so you still average 5 mpg, LOL.

50 miles in PA = 10 gallons of fuel used = IFTA tax bill of $7.85
150 miles in VA = 30 gallons of fuel used = IFTA tax bill of $9.24
Total IFTA costs = $17.09

Pennsylvania ($14.31 Tax Refund or Credit)
$160.12 - $14.31 = $145.81 Total fuel and IFTA costs

Virginia (Additional $4.77 owed to IFTA)
$142.76 + $.4.77 = $147.53 Total fuel and IFTA costs

$147.53 - $145.81 = $1.72 saved by buying all of your fuel in Pennsylvania, even with a pump price that is $.434/Gallon higher than Virginia



For anyone trying to get their head around IFTA, the scenario comes out the same every time, all the time. Cheapest net fuel price always results in the lowest cost of operation. Pick any fuel locations and do the math.

The hard part comes when you are driving all over the country and not always knowing where you are going to be in the next few days, therefore not always knowing where you are going to be able to buy the cheapest net price fuel.

When you are operating in a specific area, simply find the fuel locations that provide the cheapest net fuel costs and fill up there all the time.

Often times, the cheapest net fuel costs will be found near state lines where the stations with higher fuel taxes are trying to compete with lower fuel tax stations near them in the next state.

I buy the cheapest fuel without ethanol in VA that I can. I owe PA $100 in 3 months after running mostly in VA. I save over $100 in TWO fuel stops. Considering I purchase fuel a lot more than twice in a 3 month span, it pays to let PA have their 100 bucks as cash. It's the only state I owe any money to.

I run PA, MD, WV, and VA. No other states. I don't fuel in MD or WV.

For every ~300 miles I run in VA, WV, and MD I run ~30 in PA.

Fuel costs are never the same. VA is a good buck a gallon less.

It's as simple as that.