How Properly Tracking Fuel Use Can Lower Your Tax Bill
Tristan Kruth
Apr 26, 2022

Tracking fuel consumption is important for every organization - an unexpectedly empty fuel tank can result in thousands of dollars of lost revenue and a major headache. But beyond ensuring that day-to-day operations go well, tracking fuel is crucial for business planning and crucial reporting tasks like those required to file for fuel taxes. In fact, properly tracking your fuel use can lower your overall tax bill significantly, without requiring major investments of time from you and your team. 

Reasons To Properly Track Fuel

Why track fuel at all? Many organizations only track fuel use as much as necessary to avoid running out of fuel unexpectedly. However, more careful monitoring of fuel use can yield many financial and fleet management benefits.

Reduce fuel costs

Carefully tracking fuel usage can help lower the cost of fuel in two ways. First, carefully tracking fuel can help organizations spot inefficiencies and decrease their overall fuel use. Secondly, accurate tracking allows organizations to better communicate with fuel distributors and negotiate better prices. The price of fuel per gallon is partially determined by the margin added by fuel distributors, who are, in turn, trying to make more efficient fuel deliveries to their customers. If organizations can provide precise volumes for distributors to order, they can negotiate for better pricing.


Detect misuse

Unmonitored fuel supplies are easy targets for fuel theft and potential misuse. Simple mistakes - like putting the wrong fuel in a vehicle or forgetting to record a fill-up - are more common when fuel is not being actively tracked, and can cost organizations enormous amounts of time and money. On the other hand, organizations that track their fuel can detect and prevent theft, or correct mistaken behavior before the costs get too high.

Make Smarter Business Decisions

Fuel is often one of an organization's most expensive line items, but many organizations do not have the data they need to make better decisions and significantly impact their bottom line. By closely tracking fuel transactions, organizations can monitor fuel trends and make cost-savings decisions without disrupting their work.


One such data-driven cost savings comes from using fueling data to file accurate tax refunds.

Fuel Tracking and Taxes

When you’re managing your own bulk fuel supplies, the biggest tax refunds will come from tracking on-road and off-road fuel use. Off-road fuel use is exempt from state and federal taxes on fuel (which are designed to help pay for road maintenance), but that tax can only be ‘removed’ from the price per gallon by filing for a refund on fuel taxes. While segmenting the products you use (for example, dyed diesel) for on-road and off-road use can help you track respective use at a high level, it’s important to closely track transactions and fuel volume to ensure that you get the highest possible refund and in case you are audited.


It’s important that you begin the process of tracking tax-exempt fuel transactions as early as possible. The specific details of when and how you can file for tax refunds will depend on your location, but having a complete record of the relevant transactions will make it easier for you to file when ready.

The Power of Software

Manually tracking fuel transactions is incredibly time consuming, and creates countless opportunities for human error to corrupt your records. While such mistakes might be annoying in the course of regular business, they can be disastrous when it comes to dealing with taxes. The consequences of mistakes are too high when working on tax refunds to make recordkeeping and transaction tracking solely the responsibility of people. Fortunately, software can help.


Modern fuel management systems like FuelCloud use cloud-based software to make tracking and controlling your fuel easier than ever. With powerful reporting tools and advanced controls, FuelCloud makes managing all aspects of an organizations fueling - including fuel tax reporting - easier and more efficient for employees.

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