Use Fuel Tax Guide

The following types of fuel are subject to use fuel tax:

• Liquefied petroleum gas (LPG, Propane, Butane)
• Liquid and compressed natural gas (LNG, CNG)
• Dimethyl ether (DME)
• Dimethyl ether-liquefied petroleum gas blends (DME-LPG)
• Kerosene
• Alcohol fuels (ethanol, methanol)
• Blended alcohol fuels containing 15%, or less, gasoline by volume
• Distillate
• Stove oil
• Any other combustible gas or liquid, by whatever name the gas or liquid may be known or sold, of a kind used in an internal combustion engine for the generation of power to propel a motor vehicle on the highways, other than fuel subject to the diesel fuel or motor vehicle fuel tax.

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

Note: If you sell or use a product not listed in this section, please contact the California Department of Tax and Fee Administration (CDTFA) Motor Carrier Office (MCO) to determine whether it is subject to the use fuel tax law.

Generally, you are required to register as a vendor if you sell and deliver into the fuel tank of a motor vehicle any of the following fuels; liquified petroleum gas (LPG, Propane, Butane), dimethyl ether (DME), dimethyl ether-liquefied petroleum gas blends (DME-LPG), liquid and compressed natural gas (LNG or CNG), or any of the alcohol fuels or alcohol fuel blends, further referred to as “fuel.” 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.

It is important to note that not all fuel retailers qualify as vendors. People who pump fuel exclusively into vehicles registered for the flat rate annual tax are not vendors. Likewise, a person selling fuel only for non-vehicular use, such as retailers who exclusively sell fuel for home heating, cooking, or lighting (i.e. distillate and stove oils) are not vendors.

If you qualify as a vendor, you are required to obtain a seller's permit from CDTFA. A seller's permit is required because in addition to the use fuel tax, you are required to collect and submit the sales tax on your fuel sales. You can register for both a seller's permit and vendor use fuel tax permit using CDTFA's online registration system.

You can also download publication 12, California Use Fuel Tax – A Guide for Vendors and Users for further detail on your obligations.

Generally, you are required to register as a user if you operate a motor vehicle (including equipment such as a forklift or tractor) that is powered by a liquified petroleum gas, (LPG), dimethyl ether (DME), dimethyl ether-liquefied petroleum gas blends (DME-LPG), liquid or compressed natural gas (LNG or CNG), kerosene, alcohol fuels or alcohol fuel blends, on a highway in California.

You are not required to register as a user if your only use of the above listed fuels 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 less than three axles and does not have a gross vehicle weight over 26,000 pounds (11,797 kilograms); or, when used in combination, does not have a combined or registered gross vehicle weight over 26,000 pounds (11,797 kilograms).
• A privately-operated passenger motor vehicle. Pickup trucks are included in this class of vehicles when they are 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. If your vehicle is fueled from bulk storage, you do not qualify for the exceptions listed above.

Please read publication12, California Use Fuel Tax – A Guide for Vendors and Users for more information about your obligations.

Eligible transit operators must register as exempt bus operators for use fuel tax purposes. Users who operate public and private transit companies that provide services to students or the public may be eligible to register as exempt bus operators.

Section 8655 of the Revenue and Taxation Code imposes a tax of one cent ($0.01) per gallon or unit on the fuel used for local transit services and school bus transit. You must make a payment of one cent ($0.01) for each gallon or unit of fuel used in an exempt manner for qualifying local and transit services or school bus transit operations and the gallons or units must be reported on your Exempt Bus Operator Use Fuel Tax Return.

You can also download Publication 12, California Use Fuel Tax - A Guide for Vendors and Users for further detail on your obligations.

Users and bus operators who operate motor vehicles powered by liquefied petroleum gas (LPG), dimethyl ether (DME), dimethyl ether-liquefied petroleum gas blends (DME-LPG), liquid or compressed natural gas (LNG or CNG) may choose to register for the flat rate fuel tax decal. The flat rate decal allows you to pay an annual flat rate as an alternative to paying the tax to your vendors. The annual flat rate tax is based on the type and weight of the vehicle.

If you qualify for the annual flat rate fuel tax, you must obtain a user use fuel tax permit or exempt bus operator use fuel tax permit from the CDTFA and make payments as an annual flat rate taxpayer. After you have registered online and paid the tax, we will issue a decal that you must affix to your vehicle for which you have prepaid fuel taxes.

As a flat rate fuel tax decal holder, you are required to provide to your fuel vendors a written representation that you have prepaid the annual flat rate fuel tax. Providing the vendor with a copy of the letter we sent to you with your decals will satisfy this requirement.

When you provide written notice to a vendor that you have prepaid the annual flat rate fuel tax, you will be solely responsible for any taxes due and the seller will not be liable for collecting and remitting the use fuel taxes.

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

You can also download publication 12, California Use Fuel Tax – A Guide for Vendors and Users for more information about your obligations.

If you qualify as a user under the use fuel tax program but chose not to register, you must obtain a California Fuel Trip Permit to travel into or through California. The California Fuel Trip Permit must be purchased and completed before you enter this state.

There is no alternative to obtaining a Vendor Use Fuel Tax permit. If you qualify as a vendor, you are required to obtain a permit and file returns with the California Department of Tax and Fee Administration (CDTFA).

More about California Fuel Trip Permits

California Fuel Trip Permits are available for purchase through our online registration.

To renew and pay the Annual Flat Rate tax, you may renew online using our online registration system. You will be sent your new decals once you have renewed and paid the tax online.

You may obtain additional annual flat rate decals by requesting them through our online registration system.

To register for one of the use fuel tax program permits mentioned above, a seller's permit, California Fuel Trip permit or any other permit, license or account with the CDTFA, visit our online registration system.

Visit the Rates page to view current and historical use fuel tax rates.

File a Return Online – CDTFA's online filing service is easy, fast and free!

The use fuel tax returns are due on or before the last day of the calendar month following each reporting period. Your reporting period will be either monthly, quarterly, or yearly. Your filing frequency will be determined when you register.

• Exempt Bus Operator Use Fuel Tax Return, CDTFA-501-AB – is required to be filed by holders of an Exempt Bus Operators Permit to pay the reduced fuel tax rate.
• User Use Fuel Tax Return, CDTFA-501-AU – is required to be filed by holders of a User Use Fuel Tax Permit to report and pay the use fuel tax on the total gallons of fuel placed in the fuel tank of motor vehicles, including fuel taken from bulk storage.
• Vendor Use Fuel Tax Return, CDTFA-501-AV – is required to be filed by holders of  a Vendor Use Fuel Tax Permit to report and pay the use fuel tax collected from customers when fuel is pumped into the fuel tanks of their motor vehicles, or sold through card or key-lock facilities.

Returns must be filed by the due date to be considered timely. You are required to file a return even if you did not have any reportable activity during the reporting period. If the due date falls on a Saturday, Sunday or state holiday, returns and/or payments received on the next business day will be considered timely.

When filing online, you can file and pay your use fuel tax return in one transaction. You may also visit our website to conveniently make a payment or learn about our various payment options.

Payments must be submitted by the due date of the return to be considered timely. If the due date falls on a Saturday, Sunday or state holiday, payments received on the next business day will be considered timely.

The penalty for filing a late tax return (including tax returns for which no tax was due) and/or late payment of tax is ten percent of the amount of tax due. Late filers must include payment for the penalty and interest with their tax return.

Do not include the use fuel tax amount in your sales and use tax calculation.

A retailer of fuel must obtain a Seller's Permit from CDTFA. A seller's permit is required because in addition to the use fuel tax, a retailer is also required to collect and submit the sales tax on its fuel sales. You can register for both the seller's permit and use fuel tax account using CDTFA's online registration system.

The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements. For a listing of its assistance centers, visit the Governor's Office of Business and Economic Development website.

Visit the CalGold website for help with permit and licensing requirements for other state, federal, and local authorities (for example, you may need to be registered with the Franchise Tax Board or the Employment Development Department).

Visit California's Tax Service Center for additional tax information.

You may also want to consult with a tax professional for assistance about other agency requirements.

• Used off-highway (includes private property, an area closed to public use for vehicular travel, etc.) [See Revenue and Taxation Code Section 8653].
• Used outside California [Revenue and Taxation Code Section 8732].
• Used on U.S. Department of Agriculture highways [Revenue and Taxation Code Section 8653.1].
• Used in power take-off equipment [Regulation 1316].
• Used in agricultural and construction equipment [Revenue and Taxation Code Section 8652].
• Used by public agencies on military reservations [Revenue and Taxation Code Section 8654].
• Used by transit operators [Revenue and Taxation Code Section 8655].
  • Transit operators 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.
    • Any private company providing transportation for students under contract with a school or community college district, or county superintendent of schools.
    • Any public entity such as a transit district or authority of a city that owns and operates a transit system.
    • Any private entity providing transportation service under a contract with a public agency authorized to provide public transportation services.
    • Any passenger stage corporation engaging in certain local transit service that is subject to the jurisdiction of the Public Utilities Commission.
    • Any 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.

If you have overpaid the tax directly to the California Department of Tax and Fee Administration, you may file a claim for refund by using our online services system, by completing form, CDTFA-101, Claim for Refund of Credit, or by filing an amended return(s). Claims for refund should state the specific reason(s) for the overpayment, specify the period for which claim is being made, and the amount of the refund being claimed. The claim for refund must be in writing, be signed by you, and state the reason(s) an overpayment was made.

Publication 117, Fling a Claim for Refund, details the general requirements for filing a claim for refund and includes form CDTFA-101, Claim for Refund of Credit, and instructions. Mail claims to:

California Department of Tax and Fee Administration
Appeals and Data Analysis Branch
P.O. Box 942879
Sacramento, CA 94279-0033

You must file a claim for refund by whichever of these dates that occurs last:

• Three years from the due date of the return on which you overpaid the tax
• Six months from the date you overpaid
• Six months from the date a determination (billing) became final
• Three years from the date the CDTFA collected an involuntary payment, such as from a levy or lien

Be sure to file your claim for refund by the applicable deadline. If you do not file on time, the CDTFA cannot consider your claim, even if you overpaid the tax.

If you have questions about your deadline to file a refund claim, contact our Customer Service Center at 1-800-400-7115.

Records must be retained for at least four years unless CDTFA authorizes you in writing to destroy them sooner. For additional information regarding record retention, please view Regulation 1332 and Regulation 4901

• Use Fuel Tax Law

• Use Fuel Tax Regulations

• Publication 84 – Do You Need a California Fuel Permit or License?
• Publication 12 – California Use Fuel Tax: A Guide for Vendors and Users

• Reduced Tax Rate for Dimethyl Ether and Dimethyl Ether-Liquefied Petroleum Gas Blends Effective July 1, 2021
• Your User Use Fuel Tax Return and Decal Renewal Will Move to the New Online Services System Effective August 12, 2019
• Your Use Fuel Decal Renewal (Private Vehicle) Will Move to the New Online Services System Effective August 12, 2019
• Your Exempt Bus Operator Use Fuel Tax Return and Decal Renewal Will Move to the New Online Services System Effective August 12, 2019
• Revisions to the Vendor Use Fuel Tax Return and Launch of New Online Filing Effective August 12, 2019