New Washington State fuel tax laws and IFTA compliance tips

Oct. 23, 2025, 5:23 a.m.
New fuel tax laws in Washington State and key compliance tips for fleets under the International Fuel Tax Agreement (IFTA). This will help trucking companies stay compliant and avoid costly penalties.
New Washington State fuel tax laws and IFTA compliance tips

1. What’s new with Washington fuel taxes

Here are the major changes you need to know:

  • As of July 1, 2025, the state fuel tax rates changed:

    • Gasoline: from $0.494 per gallon to $0.554 per gallon.  

    • Diesel / special fuel: from $0.494 per gallon to $0.584 per gallon.  

  • Diesel sees additional increases: the diesel tax had an extra 3 ¢ bump and will rise further.  

  • The gasoline tax increase was part of a larger transportation funding package (~$3.2 billion) to cover shortfalls and inflation in road/bridge work.  

  • The state’s taxes will also be indexed to inflation in future years (e.g., 2 % per year starting July 1, 2026 for gasoline) to keep pace.  

  • These changes affect all fuel tax licensees, and Washington’s Washington State Department of Licensing (DOL) flagged that systems, invoicing and reporting must be updated to the new rates. 

Why this matters for trucking companies / fleets:

  • Higher per-gallon fuel tax means increased operating costs, especially for heavy fuel-users (long hauls, large fleets).

  • If you operate interstate (or multi-jurisdiction) under IFTA, your tax burden and reporting complexity increase.

  • Systems and bookkeeping need to be updated—fuel invoices, mileage logs, fuel tax returns must reflect new rates.

  • You should review your fuel purchasing strategy, where you buy fuel, routing, etc., for cost optimization.

2. IFTA compliance & best practices in Washington

For fleets operating in multiple jurisdictions or crossing state lines, IFTA compliance is critical. Here are the key Washington-specific rules + best practices:

2.1 Core IFTA obligations

  • Under IFTA, you must file a quarterly fuel tax return (even if no operations in a given period).  

  • For each jurisdiction (including Washington), you report: total miles traveled, taxable miles, total gallons of each fuel type purchased/taxed in that jurisdiction.  

  • Maintain accurate fuel invoices/receipts: date, seller, gallons, fuel type, tax paid, OEN or VIN. 

  • Mileage records must show origin & destination, trip routes, miles by state/province (highway, non-highway, deadhead).  

2.2 Washington-specific IFTA / fuel tax requirements & audit risk

  • Because of the rate change (July 1 2025), Washington licensees must update fuel tax systems accordingly.  

  • The DOL’s fuel tax audit unit can audit IFTA and fuel tax accounts for up to 5 previous years in Washington.  

  • Inadequate records can lead to adjustments: increased tax liability, reduced credits, penalties.  

2.3 Best practice compliance checklist

Here’s a checklist to help you make sure you’re covered:

  •  Update accounting/ERP systems to reflect the new tax rates (gas $0.554, diesel $0.584 per gallon for FY 2025-26) in Washington.

  • Train staff (fuel purchasers, dispatch, accounting) about the rate changes and importance of proper documentation.

  • Check fuel invoices: Ensure Washington fuel purchases show correct tax, gallons, etc., to support IFTA claims.

  •  Maintain detailed trip logs: origin, destination, miles per jurisdiction, etc. Especially for trucks crossing into/out of Washington.

  • File IFTA returns on time: Late returns or payments trigger interest (Washington charges 1% interest monthly on net balance due) and possible reinstatement fees.  

  • Retain records for at least 4 years: Washington requires IFTA records to be kept 4 years from due date or filing date, whichever is later.  

  • Review audit exposure: Because Washington audits up to 5 years back, do internal reviews of past years to find and correct errors before an audit.

  • Optimize fuel stops & routing: With higher tax rates in Washington, evaluate whether cross-border fueling (in neighboring jurisdictions with lower tax) makes sense — but ensure compliance (you still report Washington miles/fuel).

  • Monitor future rate changes: Since rates are indexed to inflation and subject to legislative change, keep monitoring DOL updates.  

3. Implications & tips for trucking operations

  • Because the fuel tax increases, trucking companies should review their fleet’s fuel consumption and fuel stop strategy: e.g., decide whether more fuel purchases are made in Washington vs. other states, factoring in rates and haul routing.

  • For interstate carriers, the higher Washington rate means higher cost per gallon – so factor that into lane cost calculations, rate negotiations and margins.

  • The improved audit risk means documentation must be more robust: virtually every trip, fueling event, and jurisdictional mile matters.

  • Fuel tax increases likely mean trucking companies may pass through costs to shippers/customers or adjust contract terms.

  • Consider fuel tax as part of the broader cost model: rates will escalate (due to inflation indexing), so budgets must allow for future increases.

  • Stay informed on emerging policies: e.g., Washington is making changes to its clean fuel standard and heavy-duty trucking incentives.