Claim the Non-Taxable Use of Gasoline Online
- Fast, Accurate Schedule C Filing

IRS Form 8849 Schedule 1

What Is the Non-Taxable Use of Gasoline?

  • Gasoline that is sold in the United States already has a federal excise tax of 18.3 cents per gallon included. However, the IRS permits eligible users to get a credit or refund if the fuel they use is considered a non-taxable use of gasoline.
  • Usually, this is the case when gasoline is used for off-highway or other qualifying activities rather than highway transportation.
  • Businesses can get the credit by filing Schedule C with Form 720 (Quarterly Federal Excise Tax Return). Under some circumstances, a refund can be requested through Form 8849 (Claim for Refund of Excise Taxes).

Situations Qualifying for Non-Taxable Use

Off-Highway Business
Operations

Companies in the construction industry that are using gasoline-powered machinery on private sites.

Warehousing and manufacturing units that use their equipment inside their premises.

Agricultural and Farming Activities

Gasoline used in tractors, irrigation systems, and harvesting equipment.

Gasoline consumed by farm equipment that only serves farmland.

Government and Qualified Organizations

Federal, state, and local governmental activities that include gasoline.

NPOs that meet certain guidelines of the IRS.

How Schedule C Is Used to Report Non-Taxable Fuel Claims

Purpose of Schedule C

  • Taxpayers should use the Schedule C form to record credits associated with federal excise taxes.

  • It is applied to record the credit for fuel used in qualifying non-taxable usage of gasoline activities.

  • It ensures that the fuel tax credits computation is performed properly as per IRS requirements.

Filing Schedule C with Form 720

  • When filing Form 720, Schedule C should be attached.

  • The form helps in identifying the fuel type used.

  • It calculates the credit value based on the fuel tax rate imposed by the IRS.

How to Make Your Claim of Non-taxable Gasoline.

STEP 1

Gather Documentation

  • Gather gasoline receipts that show the quantity of gallons bought, dates and supplier information.

  • Keep usage logs, making sure to separate off-highway business use from highway travel.

STEP 2

Calculate Qualifying Gallons

  • Off-highway gallons to be credit eligible x 18.3¢ rate (500 gal * $0.183 = $91.50 credit).

  • Keep separate logs for equipment such as construction equipment, farm use tractors, or generators.

STEP 3

Complete Schedule C (Form 720)

  • Enter the type of gasoline and qualifying gallons on the lines of Schedule C. The form will automatically calculate your credit based on IRS rates.

  • Remember to include it with your quarterly Form 720.

STEP 4

E-File with IRS-Authorized Provider

  • The automated E-file720 system is used to file securely and instantly with the IRS.

  • It has in-built validation that helps in trapping mistakes before you send your filing, and therefore, no paper mailing is required.

STEP 5

Track & Save Records

  • You get IRS acknowledgment instantly.

  • Retain electronic records of receipts, logs, and filing confirmation of at least 4 years (IRS audit requirement).

Pro Tip: Q1 2026 Form 720 deadline is April 30. Submitting your filing early will allow you to avoid any fines!

Industries That Commonly Claim Non-Taxable Use of Gasoline

Industry Eligible Equipment & Uses
Construction Gasoline for loaders, compactors, and generators on private sites
Farming Equipment for planting, harvesting, irrigation, and off-road farm vehicles
Manufacturing Equipment powering production, indoor maintenance machinery

Documentation Required

Fuel Purchase Documentation

  • The Gasoline receipts should indicate their quantity, price, and date of purchase.

  • The name of the vendor or supplier should be displayed in detail.

Operational Usage Records

  • Record the fuel consumption in activities eligible for credit.

  • Separate taxable highway use from non-taxable usage whenever possible.

Important IRS Forms, Schedules, and Fuel Tax Rates

IRS Form / Schedule IRS Number Purpose Filing Frequency
Quarterly Federal Excise Tax Return Form 720 Reports federal excise taxes and related claims Quarterly
Claims for Excise Tax Credits Schedule C (Form 720) Reports credits, including non-taxable fuel use Quarterly
Claim for Refund of Excise Taxes Form 8849 Requests refunds of certain excise taxes As Needed
Fuel Tax Refund Claims Schedule 1 (Form 8849) Used to claim fuel tax refunds As Needed

Federal Fuel Tax Rate for Gasoline

Fuel Type IRS Excise Tax Rate
Gasoline 18.3 cents per gallon (18.4¢ as of 2025 per IRS updates)

Advantages of E-Filing through E-File720

Faster Processing

  • The non-taxable use of gasoline is conveniently reported via e-filing to the IRS.

  • This method offers business organizations immediate acknowledgment of the claims.

  • Reduction of postal delays and waiting time to check claims.

Improved Accuracy

  • The current fuel credit is accurately forwarded to the taxpayer with the help of automated calculations.

  • Before sending, built-in validation checks for unauthorized or missing details.

  • It avoids mistakes originating from the manual data entry that often occur in paper filings.

Secure Data Transmission

  • Encryption technology safeguards confidential taxpayer and fuel consumption information.

  • Secure IRS-authorized transmission ensures data integrity during submission.

  • It keeps records well-protected and easily accessible in the future.

Convenient Record Management

  • Companies can manage fuel purchase information and claim details on a single platform.

  • Digital storage eliminates the need for searching through paperwork.

  • Helps maintain proper records for compliance and IRS verification.

Efficient Compliance Tracking

  • Online filing systems track the amount of gasoline purchased and used.

  • Business owners can efficiently maintain the schedule and avoid missing any deadlines.

  • Organized tracking ensures accurate reporting of non-taxable use of gasoline credits.

Start Your Non-Taxable Use of Gasoline Claim Today

E-file your Schedule C on time, list your qualifying gallons, and grab the eligible fuel tax credits using efile720.com, a secure IRS-authorized provider platform.

File Form 720 Now

Frequently Asked Questions

Non-taxable use of gasoline refers to instances where gasoline is used for purposes exempt from the federal highway fuel tax.

Examples: Farming purposes, use of off-highway business equipment, or government vehicles.

Typically, businesses indicate their non-taxable use of gasoline on Schedule C, which is then attached to Form 720 (Quarterly Federal Excise Tax Return).

Refunds may also be claimed by filing Form 8849.

Presently, the federal excise tax on gasoline is set at 18.3 cents per gallon.

Businesses that are eligible for non-taxable use of gasoline can figure out their credits based on this rate.

To justify a non-taxable use of gasoline claim, companies should provide the fuel purchase invoices, records of operational use, as well as evidence that the gasoline was used for eligible purposes.

Definitely! You can submit electronically Form 720 along with Schedule C by using an IRS-authorized e-filing platform that you can rely on.