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

This section provides general information for users, including when a user use fuel permit is required, California Fuel Trip Permits, responsibilities, exempt uses of fuel, and selling a vehicle that has been registered under a use fuel tax permit.

User use fuel tax permit required

In general, you qualify as a “user” and must register for a permit if you own, operate, or lease a motor vehicle, including equipment such as a forklift or tractor, that is:

• Powered by liquefied petroleum gas, dimethyl ether, dimethyl ether-liquefied petroleum gas blends, liquid or compressed natural gas, kerosene, or certain alcohol fuels, and
• Operated on a highway in California.

Exceptions

You are not required to obtain a permit if your only use of fuel in this state is to operate:

• A vehicle licensed under the International Fuel Tax Agreement (IFTA).
• A vehicle registered out of state if the vehicle has fewer than three axles and does not have a gross vehicle weight over 26,000 pounds (11,797 kilograms); or, when used in combination (that is, a tractor-trailer combination), does not have a combined or registered gross vehicle weight over 26,000 pounds (11,797 kilograms).
• A privately operated passenger motor vehicle. Included in this class of vehicles are pickup trucks when used like an automobile for the private transportation of people.
• A recreational vehicle. Recreational vehicles include motor homes, pickup trucks with attached campers, and buses when used exclusively for personal pleasure.
• A commercial vehicle, including a pickup truck, with an unladen weight of less than 7,000 pounds.
• A privately operated two-axle truck that you have rented or leased for a period of 30 days or less.

Notes

1. You are required to obtain a use fuel permit (or a four-day trip permit) if the vehicle is fueled from bulk storage.

User permits

As a user, you must obtain one of the following permits to operate your vehicle on a highway in California:

• A California User Use Fuel Tax Permit.
• A California Fuel Trip Permit (designed for occasional trips into California)

You can place multiple vehicles on the same permit.

California Fuel Trip Permit

You may obtain a California Fuel Trip Permit online or at any of our offices, or at some DMV field offices that sell California Fuel Trip Permits.

The permit costs $30 and is issued for specific dates. It is not valid before or after those dates.

User responsibilities

As the holder of a User Use Fuel Tax Permit, you must:

• Pay tax to your fuel vendor, provided the vendor facilitates the pumping of the fuel directly into your motor vehicle fuel tank, or you buy it using a card or through a key-lock facility.
• File tax returns that report the total gallons of fuel placed in your vehicle's fuel tank, including fuel taken from bulk storage.
• Pay tax to us. You must pay any tax you owe when you file your return. If you have paid tax to vendors more than the amount due, you may claim a credit for overpaid tax.
• Pay tax directly to us if you use fuel in a taxable manner and do not pay tax at the time of purchase. This applies to your purchases of fuel in bulk quantities and purchases of fuel dispensed by the vendor into containers other than motor vehicle fuel tanks.
• Provide your fuel vendor the proper (CDTFA authorization) for purchasing tax-exempt fuel, if applicable.
• Inform us when you sell or transfer any vehicles registered for the use fuel tax.
• Keep and maintain complete records for four years.

If you do not fulfill these responsibilities, we may suspend or revoke your permit.

Recordkeeping

You should keep all receipts, invoices, and details of figures relating to your purchase and use of fuel. If you are making interstate trips, your records should include your trip log. If you are using fuel from bulk storage, you should keep a log or other records showing the amounts withdrawn and the vehicles into which the fuel is pumped. You must keep and maintain these records for four years, unless we authorize you to dispose of them.

Limited exceptions for full payment of the use fuel tax

You must pay the full use fuel tax rate unless you qualify for a reduced rate as the operator of:

• A public or private transit company that provides transportation services to students or the public, or
• A vehicle powered by LPG, DME, DME-LPG blends, LNG, or CNG, and you have elected to pay the annual flat rate fuel tax.

Exemptions for certain fuel use

The following sections contain information on the exempt uses of fuel in a vehicle.

Off-highway

Fuel used to operate vehicles off-highway is exempt from use fuel tax. “Off-highway” includes private property, any road or area which is closed to public use, or any place which does not fall within the definition of a highway.

Outside California

If you purchase fuel in California for use both inside and outside the state, you are not liable for tax on the fuel used outside the state. You may claim a credit for the fuel used outside California on your user return.

U.S. Department of Agriculture highways

Fuel used in motor vehicles operating on highways under the jurisdiction of the U.S. Department of Agriculture (USDA) is exempt from tax provided the user pays or contributes to the cost of constructing or maintaining the highway under an agreement with the USDA. An example of such a highway is a logging road within a national forest.

If you are a user eligible for this exemption, you are required to pay the use fuel tax when you purchase the fuel, and can claim a credit on your User Use Fuel Tax Return. To support your claim, you must keep records that describe the highway, the route traveled, the amounts paid for construction or maintenance of the highway, and the gallons of fuel used while traveling on the highway. You must also keep a copy of your USDA agreement.

Power take-off equipment

Fuel used in a vehicle for a purpose other than propelling it on a highway is exempt from tax. This includes fuel used to operate power take-off equipment. Power take-off equipment is generally defined as an accessory which is mounted onto a transmission allowing power to be transferred outside the transmission to a shaft or driveline. The accessory is usually either a small gearbox with an external shaft, or a short shaft with a driveline yoke assembly for attaching an external driveline. The vehicle's transmission must be specially designed for a power take-off.

If you operate vehicles having power take-off equipment, you may claim a deduction on your User Use Fuel Tax Return for the fuel used to operate the equipment.

Agricultural and construction equipment

Fuel used in agricultural vehicles or construction equipment is exempt from the tax when the equipment is:

• Exempt from registration under the Motor Vehicle Code, and
• Operated only incidentally on a highway. Please note: Incidental operation means operating on a highway only when moving between farms or construction sites located close to one another.

Examples of such equipment are tractors, swathers, and graders with rubber tires.

Equipment running on tracks, such as bulldozers, does not qualify as a motor vehicle. Therefore, you should not report fuel used in this type of equipment.

Public agencies on military reservations

Fuel used in any motor vehicles owned by a county, city, district, or other political subdivision or public agency is exempt from tax when the vehicle is operated within a military reservation on roads that are constructed and maintained by the U.S. government. When any such vehicle is also operated on a public highway in a continuous trip, tax is due on the portion of fuel used on the public highway.

Transit operators

Certain public and private operators of transit services are eligible for a reduced rate of use fuel tax. Eligible operators pay one-cent ($0.01) per gallon, instead of the full rate. Qualifying operators and services include any:

• School or community college district, or county superintendent of schools that owns, leases, or operates buses to transport students to and from school or for school-related activities.
• Private entity providing transportation for students under contract with a school or community college district, or county superintendent of schools. The contract must have been entered into after October 1, 1984, and the partial exemption applies only to the fuel used to provide services covered by the contract.
• Transit district, transit authority, city, or county that owns and operates a local transit system and engages in transit services itself or through a wholly-owned nonprofit corporation.
• Private entity providing transportation service under a contract with a public agency authorized to provide public transportation services. To qualify, the contract must have been entered into after September 26, 1978, and cannot be a general franchise agreement. The reduced rate applies only to that fuel used to provide the contract services.
• Passenger stage corporation engaging in certain local transit service that is subject to the jurisdiction of the Public Utilities Commission. Pursuant to section 226 of the Public Utilities Code, a passenger stage corporation is defined as “every person engaged as a common carrier for compensation, in the ownership, control, operation or management of a passenger stage over any public highway in this state between fixed terminals or over a regular route,” unless otherwise excepted. To qualify, the corporation must be providing the service for the transportation of people for hire, compensation, or profit. The service must be exclusively operated in urban or suburban areas or between cities in close proximity. In addition, one-way route mileage cannot exceed 50 miles.
• Common carrier of passengers not qualifying as a passenger stage corporation that operates exclusively within the limits of a single city between fixed terminals or over a regular route. To qualify, 98 percent of the total route mileage must be located within the limits of a single city.

Charter-party carriers of passengers, as defined in section 5360 of the Public Utilities Code, are not considered transit operators and do not qualify for the reduced use fuel tax rate described above. Nor does the reduced rate apply to carriers that provide the transportation services described in subdivisions (a) and (e) of section 5353 of the Public Utilities Code, if such transportation service is rendered as a contract carrier and not as a common carrier of passengers.

Qualifying transit operators are required to pay the reduced fuel tax rate by filing CDTFA-501-AB, Exempt Bus Operator Use Fuel Tax Return, instead of CDTFA-501-AU, User Use Fuel Tax Return. Transit operators qualifying for the exemption must keep all contracts and other relevant documents that will support their claimed exemption. Operators who provide both nonexempt and exempt services must keep records detailed enough to support any claimed exempt fuel use.

If an operator makes consistent overpayments of use fuel tax to his or her suppliers because of the exemption, the operator may obtain authorization from CDTFA to purchase fuel without the use fuel tax. To make a tax-exempt purchase, the operator must issue a copy of a CDTFA authorization to the supplier. The operator would then pay any tax liability when filing the Exempt Bus Operator Use Fuel Tax Return, at the rate of one-cent per gallon for exempt bus use and the full tax rate for any nonexempt use.

Annual flat rate fuel tax

As an alternative to paying use fuel tax to vendors, an operator of a vehicle powered by LPG, DME, DME-LPG blends, LNG, or CNG may pay an annual flat rate fuel tax. The tax is based on the type and weight of the vehicle:

(See Tax Rates—Special Taxes and Fees.)

If you choose to pay the annual flat rate fuel tax, you must obtain an alternative fuel decal account from us to make payments as an annual flat rate taxpayer. You can apply or renew online. Online registration services are also available using our convenient computer kiosks located in our offices. After you register online and pay the tax, we will issue a decal that you must affix to your vehicle. The decal cannot be transferred to another vehicle. The tax covers the twelve-month period beginning with the month in which the payment is due. For example, an annual tax due in April covers the period from April 1 through the following March 31.

When an owner or operator elects to pay the annual flat rate fuel tax on more than one vehicle, the owner or operator may request that we prorate the tax due on a vehicle added during the annual period, so that all vehicles have the same annual period. In the year a vehicle is added, the annual flat rate fuel tax for that vehicle is calculated by dividing the tax by 12 and multiplying the resulting amount by the number of months remaining before the beginning of the next annual period.

Certain annual taxpayers—for example, those who make bulk purchases of fuel—may be required to file annual returns with us.

Registration of a vehicle for the annual flat rate tax is not transferable. If you sell or transfer a vehicle to a new owner, you must inform us within ten days of the transfer date.

If you have questions about whether your fuel use is exempt from tax, contact our Motor Carrier Office.

Claim for refund

Your User Use Fuel Tax Return or Exempt Bus Operator Use Fuel Tax Return provides lines for calculating and claiming a credit for overpaid tax. If you have overpaid the use fuel tax, you should log into your online account and complete and file your return, clearly indicating the resulting credit as a negative number (credit) in order to obtain a refund.

Refunds will be processed by us as soon as possible. You must keep adequate records to support your credit.

Leased vehicles

Normally, you must report and pay tax as a user if, by the terms of the lease contract, you are responsible for purchasing or supplying fuel for the vehicle. If the contract gives the lessor the responsibility, the lessor would be required to register as the user.

Under certain conditions, however, a lessee is considered to be a user, even though the lessor has the responsibility for purchasing or supplying the fuel. Such lessees are called qualified users. Usually, qualified users are trucking companies that lease vehicles from owner-operators and have control over the fuel purchased and used by the owner-operator lessors. To be considered a qualified user, a lessee must:

• Hold a user use fuel tax permit and operate under a certificate of public convenience and necessity issued by the California Public Utilities Commission or a similar authorization issued by the Surface Transportation Board.
• Maintain records that adequately document all the movement of the leased vehicle within this state.
• Agree to be responsible for reporting and paying all use fuel tax incurred by the lessor when he or she operates the vehicle on behalf of the lessee.
• Inform the lessors of their responsibilities under the qualified user's program.

In addition, the lessor (owner-operator) must:

• Always carry the lease agreement in the leased vehicle.
• Give the lessee's name and account number when making credit purchases of fuel.
• Use the vehicle only for the lessee's operation. If the lessor is operating the vehicle for his or her own business or is operating another vehicle within the state, he or she is a user and must obtain a user permit.

The qualified user program does not apply to trip leases or to leases of less than 31 days.

You should apply with our Motor Carrier Office for qualified user status. In some cases, however, we may consider you a qualified user if you meet all the above criteria. In either case, we will send you a letter notifying you of your status and outlining your responsibilities as a qualified user.

Selling or transferring a use fuel vehicle

If the vehicle must be registered under a use fuel tax permit, you must obtain a tax clearance from us before the Department of Motor Vehicles (DMV) will transfer ownership.

We will issue the clearance only after you have paid all use fuel tax due from the operation of the vehicle or you have posted security adequate to cover any tax due.

Obtaining a tax clearance

To obtain a clearance, you must file CDTFA-329, Request for Certificate of Excise Tax Clearance, with our Motor Carrier Office or any field office.

The following copies of information must accompany the Request:

• Proof of registration. Types of documents include: a current registration, certificate of ownership, or, if the vehicle is from out-of-state, a certificate of title or origin.
• Selling price and date of sale. You must submit a bill of sale signed by both you and the purchaser, and a purchase contract or sales agreement.

If you are leasing the vehicle, you must also provide a copy of the lease agreement. This will enable us to determine whether you or the lessor is the user.

Once we have established that you have paid all the use fuel tax owed or you have adequate security for any unpaid tax, you will be issued a CDTFA-1138, Certificate of Excise Tax Clearance. You must submit this certificate to DMV to complete the transfer or change of registration. You should keep a copy of the certificate for your records.

If you have any questions about the use fuel tax clearance process, contact our Motor Carrier Office by calling our Customer Service Center at 1-800-400-7115 (TTY:711); from the main menu select the option Special Taxes and Fees, followed by the Motor Carrier Office option.

Tax Evasion Hotline

We have established a toll-free number you may use to report suspected tax evasion: 1-888-334-3300. Customer service representatives are available to assist you Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays.

Revision August 2026