When you’re new to the trucking business, it can be hard to remember all the various abbreviations and tax form names and make sense of how they’re all related. In this article we’ll explain the Heavy Vehicle Use Tax (HVUT), the Form 2290 tax form, and IFTA tax.
What is HVUT?
The Heavy Vehicle Use Tax is a federal tax collected on vehicles that:
- Have a gross weight of 55,000 pounds or more, and
- That operate on public highways for a distance greater than 5,000 miles in a year.
Taxes are collected annually and are used for highway construction and maintenance. Here is the Federal Highway Administration website with official HVUT information.
What does “gross weight” mean? It is a combination of:
- The weight of the truck fully equipped for service, including the body, all accessories, all equipment that usually is a part of its usual operation. This includes the normal amount of lubricants, fuel, and water.
- The weight of the maximum load customarily carried on the vehicle.
It does not include the weight of the driver or special equipment (like an air compressor, crane, or not-often-used equipment). Click here for more info about the exact definition of gross weight.
The annual HVUT tax amount is $100 plus $22 for every 1,000 lbs over 55,000 lbs of the gross weight. The maximum HVUT tax amount is $550, which you’ll hit when your gross weight is 75,000 pounds or more. So if you’re above 75,000 lbs, you’ll be paying the max.
Here’s a table that shows this same information:
|Gross Taxable Weight||HVUT Tax Owed|
|Below 55,000 lbs||No tax|
|55,000-75,000 lbs||$100 plus $22 per 1,000 pounds over 55,000 lbs|
|Over 75,000 lbs||$550|
HVUT Tax Example
Here’s an example of figuring out the gross taxable weight for a truck:
Let’s say you look at your total, loaded truck weights over the last year, as determined by scale weigh-ins, and your average loaded weight is 62,000 lbs.
You would owe the base $100, plus $22 x 7, as you are 7,000 pounds over 55,000 pounds. So it’d be:
$100 + ($22 x 7) = $254
You’d owe $254.
What is Form 2290?
Form 2290 is the tax form that you use to pay your HVUT. It’s as simple as that. Here’s a picture of the HVUT form on the Federal Highway Administration site. As you can see, it’s only 2 pages: nothing too scary.
You can also use the Form 2290 for other things like:
- Figuring out how much you owe if a truck’s functional gross weight increases and makes it fall into another category
- Claiming a suspension (in other words, an exemption) for a truck that is expected to be run fewer than 5,000 miles (for agricultural vehicles, 7,500 miles or less)
- Claiming a credit for tax already paid on vehicles that were destroyed, stolen, sold, or used 5,000 miles or less (7,500 miles or less for agricultural vehicles)
- Report the acquisition of a used taxable vehicle for which the tax has been suspended
Be aware you will need to have an EIN (Employee Identification Number) to file. If you don’t have one, get one first. Here’s the IRS EIN registration page.
When is Form 2290 due?
When to submit this tax form is admittedly a little complicated. But in a nutshell: when you first get your truck, you are expected to make your first HVUT payment about a month or so after that. You will be calculating the amount you owe up to the beginning of July, because July is the start of the HVUT calendar year.
For example, if you get your truck at any point during November, you are expected to pay by the end of December. This is true no matter if you purchase in the beginning of November or at the end of November: this means you have as much time as two months and as little as one month to pay.
You will be calculating payment for up to June 30th: you’ll be paying a pro-rated amount, from November to December, and then, once July hits, you’ll be paying for the next year up until the following July.
Here are the current (2016-2017) Form 2290 deadlines. (Be aware the HVUT payment schedule may change in future.)
What is IFTA?
IFTA (International Fuel Tax Agreement) is not related at all to HVUT and Form 2290. It is its own thing.
It’s important to understand what IFTA is, because when you understand it (and it’s pretty simple) you’ll probably never make any real mistakes. If you’re confused about IFTA you’ll probably make a mistake so let’s try to understand it
IFTA is an agreement between Canada and the lower 48 U.S. states. It was created to ensure that states/provinces receive the right amount of taxes to pay for road maintenance. This tax usually comes out of state fuel tax, charged at the pump. But because truckers often go on long hauls, the pump charge isn’t an efficient way to do this.
For example: you might fill up in Mississippi, but then immediately cross over into Alabama. If you did this, you’ve effectively paid fuel tax to Mississippi but then put the wear and tear on the roads in Alabama. And Alabama is a little peeved about that, as you can imagine. They want their cut of the taxes for that wear and tear.
So that’s where IFTA comes in. By getting truckers to track all their miles in each state, they can adjust the tax amounts on a state-by-state basis.
Different states and provinces have different fuel rates, too. For example, Alabama’s diesel fuel tax is a few cents more per gallon than is Mississippi’s. (Here’s the Wikipedia page showing fuel tax amounts across the U.S.) So if you filled up in Mississippi and then immediately burned up that fuel in Alabama, you’d later even up by sending a little bit more money to Alabama. Not much: remember you already paid the large bulk of that tax at the pump. But enough to make up for the small differences between the states.
If you understand IFTA well it’s a piece of cake. You can also think better about how to strategize where and when to fill up. I actually wrote a popular article about the best strategies for where to buy fuel when taking IFTA into account. A lot of people make IFTA way too complicated, and that means they don’t make the best fuel decisions.
Who pays IFTA?
Who pays IFTA? You should register for IFTA tickets if a transportation vehicle’s power unit:
- Has two axles with a gross vehicle weight more than 26,000 pounds, or
- Has 3 or more axles regardless of truck weight
You only need to register for IFTA if you plan on operating in more than one state or province. Obviously if you are staying in one state you won’t need to register for IFTA. For more info on IFTA rules, see the IFTA Wikipedia entry.
Keep in mind IFTA covers fuel taxes only. It does not cover road taxes, weight mileage taxes, or any other jurisdiction-specific taxes.
Registration and due dates
You register for an IFTA license in the state where you are based. Just google ‘ifta register oregon’, or whatever your state is, and you should find where to apply.
IFTA payments can be made all at once, or you can due them quarterly. Doing them quarterly makes it easier, so you aren’t caught off guard by a big lump sum.
Help with software
There are also software solutions that make dealing with IFTA taxes easier. Rigbooks is a software that tracks IFTA and other trucking payments and taxes. You can sign up for a free 30-day trial of Rigbooks here.
Hopefully this article has helped you understand the difference between HVUT, Form 2290, and IFTA. Check out our Resource Center for more articles on trucker/owner-operator strategies.
If you have any questions about this article or want to learn more about how our software, Rigbooks, can help you with your tax calculations, send us a message on our Contact Page.
My name is Jason Forrest, and I’m the creator of Rigbooks. Rigbooks is a cloud-based software that makes it easier for small and medium-sized trucking companies to do their job. We’ve been around since 2010.
A little about me: I grew up in a trucking family and from an early age I learned about the day-to-day problems that truck owner/operators have to deal with. I was into computers and programming as a kid so over the years I helped write small computer programs that helped my parents run their company better. Eventually that led to the idea of putting all those tools together in one package. And Rigbooks was born.
Want more? Check out my free course...
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