IFTA tax rates by state for Q3 2026 — which five states will cost you the most

Indiana's effective rate of $1.22/gallon (base $0.61 + surcharge $0.61) is the highest in the country for Q3 2026; California ($1.09/gal), Pennsylvania ($0.741/gal), Illinois ($0.607/gal), and Washington ($0.49/gal) round out the top five.

Indiana's $1.22/gallon is actually two separate line items on your IFTA return

Indiana's base IFTA rate is $0.61/gal, but the state adds a separate $0.61/gal surcharge that must be reported on Schedule 2 of your IFTA return, not Schedule 1. Many owner-operators miss the surcharge entirely because it's a separate calculation from the base tax. The surcharge is owed on total taxable gallons consumed in Indiana, regardless of where you bought the fuel.

This two-tier structure means Indiana looks deceptively cheap at first glance. The base rate alone ($0.61) ranks low, but adding the surcharge brings you to $1.22/gallon—effectively double. On a 180-gallon Indiana leg, that's $109.80 in base tax plus another $109.80 in surcharge liability: $219.60 total. Miss the Schedule 2 line and you've underpaid by $109.80.

California and Pennsylvania have higher raw rates than Indiana, but no surcharges complicate filing

California's straight $1.09/gal diesel rate is a single line on your return. Pennsylvania's $0.741/gal also has no additional surcharge layer. Both states' rates are simpler to audit than Indiana because there's no Schedule 2 component—you calculate total gallons consumed, multiply by the published rate, and you're done.

The trap: Indiana looks lower than California and Pennsylvania until you add the surcharge. A driver glancing at base rates might think Indiana is cheaper than it actually is, then file a Q3 return short by $100+ per quarter.

Five states impose surcharges that aren't included in the base IFTA rate

Indiana adds $0.61/gal surcharge (doubles filing complexity). Virginia adds $0.143/gal surcharge on diesel. Kentucky adds $0.105/gal surcharge. New York adds $0.0095/gal petroleum business tax. New Mexico has a small surcharge structure that varies by fiscal year.

All surcharges are calculated on total gallons consumed in that state, not on net refund amounts. If you drove through Kentucky and burned 105 gallons there, you owe Kentucky's $0.105/gal surcharge on all 105 gallons, even if you purchased zero gallons in Kentucky. This is the most common underpayment trap: drivers assume surcharges only apply to fuel they bought in the state.

Worked example: 2,800-mile route through Indiana, Illinois, and Kentucky

An owner-operator runs 2,800 miles in Q3 2026: 1,200 in Indiana, 900 in Illinois, 700 in Kentucky. Total fuel purchased: 420 gallons, distributed proportionally by miles: 180 gallons in Indiana, 135 in Illinois, 105 in Kentucky.

Forgetting Kentucky's $0.105/gal surcharge adds $11.03 to the total liability. On Indiana alone, missing the Schedule 2 surcharge costs $109.80 in underpayment. This driver's Q3 return, if filed without surcharge lines, would show $193.78 in liability instead of $323.61—a $129.83 shortfall that triggers audit penalty, interest, and back tax.

Alaska ($0.088/gal) and Mississippi ($0.18/gal) are the cheapest fuel-tax states, but that doesn't mean you buy there

IFTA tax is owed where you consume fuel, not where you buy it. Running 500 miles through Alaska costs you $0.088/gallon in fuel tax for those miles, not because you filled up there, but because you drove there. If you cross Alaska on a long haul and burn 75 gallons, you owe 75 × $0.088 = $6.60 to Alaska, period. Where you bought those gallons is irrelevant for IFTA liability purposes.

Many owner-operators misunderstand this and chase fuel-purchase discounts in low-tax states thinking it reduces their IFTA bill. It doesn't. Fuel-purchase location is irrelevant unless you're running a legal short-haul exemption. The real strategy: if your route passes through low-tax Alaska or Mississippi, you owe less for that segment because you're consuming fuel in a low-tax jurisdiction.

Indiana, Virginia, and Kentucky rates change quarterly because state fuel-price formulas tie to diesel volatility

Most states hold their rates steady for 12–24 months, then adjust once. Indiana, Virginia, and Kentucky use variable-rate formulas based on wholesale diesel prices, meaning their rates fluctuate more frequently than other states. This is why Indiana's surcharge can shift from $0.61/gal to $0.59/gal or $0.63/gal between quarters without legislative action—the formula recalculates automatically.

You must verify rates at iftach.org before filing, not assume last quarter's numbers. Using last quarter's rate on a variable-formula state is a guaranteed underpayment. Q3 2026 rates are published by IFTA Inc. by June 30 each year, so check the official matrix before calculating your July–September miles.

Q3 2026 rates must be confirmed at IFTA Inc. before October 31 filing deadline

Q3 returns (July–September miles) are due October 31. The official rate table is at iftach.org. Always use the rates in effect during the quarter you drove, not current quarter rates. If you file Q3 2026 in October 2026, you use Q3 2026 rates published in June 2026, even if Q4 rates have already been announced.

Late filing incurs a penalty of $50 or 10% of tax liability (whichever is greater) plus monthly interest. On a $323.61 liability, that's a $32.36+ penalty immediately. A missed surcharge line plus late filing can cost $150+ in penalties and interest on a single quarter.