Form 8849 Schedule 1 is how you recover the federal excise tax you already paid at the pump when the fuel went to a nontaxable use, such as farming, off-highway equipment, certain buses, aviation, or export. Gasoline carries a federal excise tax of $0.184 per gallon; undyed diesel and undyed kerosene are taxed at $0.244 per gallon. For a farm or contractor burning thousands of gallons a quarter in equipment that never touches a public road, that money adds up fast, and Schedule 1 is what brings it back.
Who Can File
The refund goes to the “ultimate purchaser,” meaning the person or entity that actually bought the fuel and then put it to a qualifying use. You do not have to be a business. Individual farmers, nonprofits, and state and local governments can all file, provided the fuel went to an eligible purpose.
Which Fuel Uses Qualify
The federal fuel tax funds highway spending, so the guiding idea is simple: if the fuel never powered a vehicle on a public road, the tax shouldn’t stick. Schedule 1 sorts qualifying uses into specific line items.
Farm Use
Fuel used on a farm for farming purposes is the most common category. That includes cultivating soil, raising or harvesting crops, and caring for livestock, poultry, or fur-bearing animals. It also covers handling, drying, packing, or storing crops in their raw state, plus maintaining the farm and its equipment. The fuel must be used on a farm in the United States and in connection with a trade or business. Driving your personal truck to town doesn’t qualify, even if you farm for a living.
Off-Highway Business Use
Fuel burned in equipment that is neither registered nor designed for highway use qualifies. Construction machinery, forklifts, stationary generators, and similar equipment all fit here. This is the category that reaches the widest range of businesses, from landscaping crews to mining operations.
Buses, Trains, Aviation, Government, and Export
Schedule 1 also covers fuel used in certain intercity and local buses, trains, and commercial aviation. State and local governments can claim on fuel used in their operations, and fuel exported from the United States is eligible too. Each of these has its own line so the correct refund rate is applied.
Alternative Fuels
The form is not limited to gasoline and diesel. Line 6 covers alternative fuels including liquefied petroleum gas (LPG), compressed natural gas (CNG), liquefied natural gas (LNG), liquefied hydrogen, and liquid fuels derived from biomass or the Fischer-Tropsch process. Each carries its own refund rate.
Refund Rates and What They Add Up To
Your refund is gallons multiplied by the rate for the fuel and the use. Column (b) of Schedule 1 prints the rate for each line, so you don’t have to look them up separately. The main per-gallon amounts are:
- Gasoline: $0.184
- Aviation gasoline: $0.194
- Undyed diesel fuel: $0.244
- Undyed kerosene: $0.244
Some uses within a fuel type carry a lower rate. Fuel used in certain intercity and local buses, for example, refunds at less than the off-highway business rate. The rate that applies to your line is printed on the form.
A farm that burns 5,000 gallons of undyed diesel off-highway in a quarter recovers $1,220. A contractor running 10,000 gallons of gasoline through off-road equipment gets back $1,840. Many operations that qualify never file, and they leave real money behind when they don’t.
Schedule 1 or Form 4136?
There are two paths to this refund, and choosing the wrong one is a common mistake. Form 8849 with Schedule 1 produces a standalone refund from the IRS during the year. Form 4136 is a credit you claim on your annual income tax return, which either reduces your tax bill or increases your income tax refund.
The pivot is $750. If your fuel tax claim for a quarter is at least $750, you can file Form 8849 for that quarter and get paid without waiting for tax season. If you don’t hit $750 in a quarter, you can either aggregate across the year on a single annual Form 8849 or claim the credit on Form 4136 with your income tax return. What you cannot do is claim the same gallons twice. Any gallons recovered on Form 8849 must come off your Form 4136 credit.
For high-volume fuel users, quarterly filing puts cash back in hand months before the annual return. Smaller operations that never clear $750 in a quarter are usually better off with Form 4136.
Deadlines
A quarterly claim must be filed during the first quarter after the quarter in which the fuel was used. Fuel used in January through March has to be claimed by June 30. Fuel used in April through June has to be claimed by September 30, and so on.
An annual claim on Form 8849 is due no later than the due date of your income tax return for that year.
There is also an outer limit. A claim must generally be filed within three years of the return it relates to, or two years from when the tax was paid, whichever is later. After that, the refund is gone.
Filling In Schedule 1
Start with the fuel type. Line 1 is gasoline, Line 2 is aviation gasoline, Line 3 is undyed diesel, Line 4 is undyed kerosene for non-aviation use, Line 5 is kerosene used in aviation, and Lines 6 through 8 cover alternative fuels and exported dyed fuels. For diesel and kerosene, you have to certify that the fuel contained no visible evidence of dye. Dyed fuel is sold tax-free for off-road use, so it carries no tax to refund.
Under each fuel type, rows list specific nontaxable uses, such as “Use on a farm for farming purposes” or “Use in certain intercity and local buses.” Put your gallons for each qualifying use in column (c). Column (b) already shows the per-gallon refund rate. Multiply (b) by (c) and enter the result in column (d).
Add every column (d) amount. That total goes in the refund box at the top of Schedule 1, then carries over to Part II of the main Form 8849.
Records to Keep
The IRS wants proof that you paid the excise tax and proof that the fuel went to a qualifying use. Purchase records should show the seller’s name and address, purchase dates, gallons, and confirmation that federal excise tax was included in the price.
On top of that, keep usage logs showing how many gallons went to each nontaxable purpose. If some of your fuel powers highway vehicles and some powers off-highway equipment, you need to be able to split the two cleanly. Weak tracking is where most claims fall apart. Log fuel by equipment or by job, and be consistent.
For exported fuel, the documentation bar is higher and includes items like an export bill of lading, a customs certificate from the destination country, or a receipt from the foreign consignee.
Keep everything for at least three years after you file. The formal rule is three years from the date you filed the return, or two years from the date the tax was paid, whichever is later.
Where to Send It
Paper filers mail Form 8849 with Schedule 1 attached to:
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0002
Use the U.S. Postal Service. Private delivery services cannot deliver to IRS P.O. boxes. This address is for Schedules 1 and 6; check the instructions if you are attaching a different schedule.
Electronic filing is available through IRS-authorized software providers that have passed Modernized e-File (MeF) testing. The IRS publishes the approved provider list on its website without endorsing any specific product. E-filing is generally faster, and for quarterly filers the savings compound over the year.
Penalties for Inflated or False Claims
The IRS treats fuel tax refund fraud seriously. An excessive claim can trigger a penalty equal to the excessive amount, and the agency has named fuel tax credit fraud on its annual “Dirty Dozen” list of tax scams. A deliberately false claim can also lead to criminal prosecution. Only claim gallons you can document with purchase records and usage logs, and never claim fuel that ran on public highways.