Publication 12, California Use Fuel Tax: A Guide for Vendors and Users
Use Fuel Tax

Use fuel tax is imposed on the use of certain fuels, not on their sale or distribution. Use fuel taxes provide revenue for planning, constructing, and maintaining California's publicly funded roadways and public mass transit systems. This section discusses the types of fuel subject to the use fuel tax, the parties responsible for collecting and reporting the tax, the circumstances under which the fuels are taxable, and the rate at which the tax is imposed.

Fuels subject to use fuel tax

The following types of fuel are subject to use fuel tax and collectively are referred to as fuel:

• Liquefied petroleum gas (LPG; a mixture of light gaseous hydrocarbons [for example, ethane, propane, butane etc.] made liquid by pressure)
• Dimethyl ether (DME)
• Dimethyl ether-liquefied petroleum gas blends (DME-LPG blends)
• Liquid and compressed natural gas (LNG, CNG)
• Kerosene
• Alcohol fuels (ethanol, methanol)
• Blended alcohol fuels containing 15 percent or less gasoline by volume
• Distillate
• Stove oil and other fuels
• Any fuel used or suitable for use in motor vehicles, other than fuel subject to the diesel fuel tax or the motor vehicle fuel tax.

In general, fuel is subject to the use fuel tax if it is:

• Used in an internal combustion engine to propel a motor vehicle on a highway in California (except fuel subject to either the motor vehicle fuel tax or the diesel fuel tax); or
• Placed in a container on the vehicle, such as a fuel tank, from which fuel is supplied to run the vehicle on a highway. Fuel placed into containers not connected to the fuel system (for example, auxiliary tanks, drums, or jerry cans) may be subject to tax if the fuel is intended for operating the vehicle on a highway.

Exclusions: Fuel types specifically excluded from the use fuel tax are:

• Those fuels (primarily gasoline) subject to the motor vehicle fuel tax,
• Diesel fuel, including biodiesel and renewable diesel, which is subject to the diesel fuel tax,
• Fuel manufactured and used for racing vehicles on racetracks.

If you sell or use a product not listed in this section, contact our Motor Carrier Office to determine whether it is subject to use fuel tax.

Highway and motor vehicle defined

Under the Use Fuel Tax Law, the terms highway and motor vehicle are broadly defined.

Highway

A highway is any publicly maintained road in California that is open to the public for vehicular travel. Roads that qualify as highways include both interstate freeways and publicly maintained surface streets. A road within a federal area, such as a national forest or military reservation, also qualifies as a highway provided it is publicly maintained and open to the public.

Roads that do not qualify as highways include:

• A road within a national or state forest, such as a logging road, that is privately constructed or maintained.
• A road in a federal area that is restricted from public use.
• A publicly maintained or constructed roadway that is not open to public vehicular use, for example, a bike path, a freeway under construction, or a street closed for repairs.

Motor vehicle

A motor vehicle is any self-propelled vehicle operated or suitable for operation on a highway. Examples of motor vehicles are automobiles, pickup trucks, and tractor-trailer units. Also included in the category of motor vehicles are forklifts and rubber-tired agricultural or construction equipment, which are capable of being driven on highways. Vehicles that run on stationary rails or tracks are not included in the term motor vehicle.

Vendor and user defined

Vendors and users are required to either collect or pay the use fuel tax. You may qualify as a vendor, a user, or both.

Vendor

A vendor is any person who sells and places, or causes to be placed, fuel into the fuel tank of a motor vehicle. A vendor can be a wholesaler, a retailer such as a service station operator, or a user who sells fuel to other users. People who sell fuel through a key or card-lock facility or self-service pump are also considered vendors. Vendor also includes any person who sells fuel delivered into the tank of a motor vehicle through a pump equipped with a key-lock meter, where the vendor retains ownership of the fuel until it is withdrawn and placed in the fuel tank, regardless of the fuel being placed in the fuel tank by the user. A vendor is required to obtain a vendor permit, collect use fuel tax, and report and pay it to us.

Not all fuel retailers qualify as vendors. People who pump fuel exclusively into vehicles registered for the annual flat rate fuel tax are not vendors. Likewise, people selling fuel only for non-vehicular use, such as a retailer who exclusively sells fuel for home heating, cooking, or lighting, are not vendors.

User

A user is any person who uses fuel to propel a motor vehicle. This includes owners, operators, lessors, or lessees of any vehicle that is operated on a highway. Except in specific circumstances, users are generally required to obtain a permit, report all taxable use of fuel, and, if necessary, pay the use fuel tax to us. People who use fuel to propel construction equipment and farm equipment are also considered users.

A user does not include a person who uses fuel exclusively for non-vehicular uses such as heating, lighting, or cooking.

Vendor and user

It is possible to be both a vendor and a user. For example, if you are a wholesaler of fuel and you make bulk sales to end users, retail sales to truck drivers, and you use fuel in your own delivery trucks, you would be required to obtain separate permits and file separate returns as both a vendor and a user. If you do not obtain the appropriate permits and report and pay the use fuel tax, you will owe interest and penalties on any unpaid tax. To ensure you are correctly registered, you should carefully review your sales and purchases to determine which permits you may need to obtain or contact our Motor Carrier Office.

Please note—interstate users: You may qualify for an International Fuel Tax Agreement (IFTA) license and may not need to apply for a use fuel tax permit. IFTA is an agreement among U.S. states and Canadian provinces that simplifies fuel tax reporting by interstate motor carriers. For more information on IFTA, see publication 50, California IFTA: Guide to the International Fuel Tax Agreement, and publication 50A, California IFTA: Introduction to the International Fuel Tax Agreement.

Use the following table as a guide to determine if you are a vendor, a user, or both:

Do I qualify as a vendor or a user of fuel subject to use fuel tax?

We may assess you a penalty, and you may be subject to fines if you are required to hold a permit and do not obtain one. These fines and penalties apply whether you are located in the state or are driving into California from another state.

Use fuel tax rates

(See Tax Rates—Special Taxes and Fees for the most current rates.)

Obtaining a permit

You must apply online for permits, accounts, or licenses. You may also access online services in our field offices and our Motor Carrier Office.

The application asks for general information about your business, such as the type of ownership, names of owners or corporate officers, business locations, and types of fuel used or sold. In addition, you may be required to provide your Social Security number or other identifying information.

After your application has been verified, you will be issued a use fuel tax permit. There are no fees for permits. If your application is denied, you will be asked to resolve the cause of denial. For further information on specific use fuel tax permits, see either the Vendors or Users section.

Updating your business information

Log in with your username and password to update your account information, including, but not limited to, updating your mailing address, email address, or telephone number, or closing your account. If you prefer, you may use CDTFA-345-SP, Notice of Business Change, Special Taxes and Fees Accounts, to notify us of any business changes.

Permit cancellation

We may contact you regarding cancellation of your use fuel tax permit if your reporting history indicates that you no longer require a permit. We will also cancel your permit at your request, provided you have satisfied all reporting requirements and paid all the tax you owe. If you no longer need your use fuel tax permit, close out your permit through your online account and return your permit to us.

Filing tax returns

Once you are registered, you will file your tax returns online on a quarterly or annual basis. It is important that we have your current contact information, so we can send you reminders and other important notifications. You must file your returns online by the last day of the month following each reporting period (quarterly or yearly). You must file a return even if you have no sales or use of fuel to report.

Penalty and interest

If you do not file your tax return by the due date, or if you fail to pay the tax you owe by the due date, you may be subject to penalty and interest charges. The penalty is ten percent of the amount of tax that should have been reported. Continued failure to file can result in the suspension or revocation of your permit.

Revision August 2026