In United States, a programme called the Credit for Federal Tax Paid on Fuels enables some firms to dollar-for-dollar lower their taxable income based on certain categories of fuel costs.
Fuel Tax Credit can be used to offset the tax that the American government levies on fuels like gasoline and diesel. The IRS levies a tax on certain fuels at the time of purchase in order to pay for highway maintenance.
In general, only the ultimate user of a fuel is eligible for a credit for untaxed use. In other words, if you weren’t the one who burned the fuel, then you usually can’t claim the credit.
Your tax liabilities are directly decreased by the tax credits calculated on Form 4136. For instance, if you have credits totaling $243, your tax obligation is reduced by the full amount of $243.
Currently, there is a federal tax of $0.184 per gallon on gasoline and $0.244 per gallon on diesel and kerosene. The amount of gallons utilised for nontaxable purposes during the year multiplied by the relevant rate is all that is necessary to determine the fuel tax credit.