41-036: 2025 IA 4136 Computation of Iowa Fuel Tax Credit 41-036 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 4136 calculates the Iowa Fuel Tax Credit for fuel purchased with Iowa fuel tax paid and used for qualifying non-highway purposes. It reports gallons purchased and claimed, fuel tax paid, sales tax owed, and credits received from pass-through entities.
Who files this form
Use IA 4136 to claim an Iowa Fuel Tax Credit for fuel purchased during the tax period for use in unlicensed vehicles for non-highway purposes. Iowa fuel tax must have been paid on the fuel.
- A pass-through entity, such as a partnership, LLC, S corporation, estate, or trust, must file IA 4136 and federal Form 4136 with its return. Credits are allocated according to each member’s share of the entity’s earnings. Special allocations are not permitted.
- If you receive a pass-through Fuel Tax Credit, report it on line 8. File a separate IA 4136 for each pass-through credit received and provide the required entity information.
What you'll need
Have these records and forms available:
- Fuel invoices issued in the name of the taxpayer or entity claiming the credit. Review them to verify that Iowa fuel tax was paid.
- Invoice dates, fuel types, whole gallons purchased, gallons used on the highway, and fuel costs for the calculations.
- Your FEIN or SSN.
- Pass-through entity information and the amount of each credit received, if applicable.
- Federal Form 4136, which must be included with IA 4136 and your Iowa return.
Keep your fuel invoices for three years after filing your return.
How to file
- Enter your identifying information and check the appropriate “Fuel used for” boxes.
- On lines 1 through 6, enter whole invoice gallons by fuel type and invoice date. Subtract highway gallons to find claimed gallons, then multiply claimed gallons by the applicable fuel tax rate.
- Calculate any sales tax owed and subtract it from the fuel tax paid. Fuel used in exempt activities, such as farming and processing, is excepted from this sales tax requirement.
- Add the credit amounts from lines 1 through 6 on line 7. Enter a pass-through credit on line 8, and add lines 7 and 8 on line 9.
- Include IA 4136 and federal Form 4136 with your IA 1040, IA 1041, IA 1120, IA 1120S, or IA 1065.
Report the credit as follows:
- IA 1040: Report line 9 on the main return, Step 6, line 23.
- IA 1120: Report line 9 on the main return, Schedule C1, line 1.
- IA 1041: Report amounts claimed by the entity on line 42. Report amounts allocated to beneficiaries on IA 1041 Schedule K-1 using tax credit code 4136.
- IA 1065 or IA 1120S: Report earned and received credits separately on Schedule B and each member’s allocated share on Schedule K-1, using tax credit code 4136.
The supplied text does not give mailing addresses or e-filing directions.
Common mistakes
- Entering a canceled fuel tax refund permit number: Enter your FEIN or SSN instead.
- Leaving “Fuel used for” blank: This area must be completed.
- Claiming fuel without checking invoices: Verify that Iowa fuel tax was paid. Invoices must be in the claimant’s name.
- Ignoring sales tax: Any credit claimed must be reduced by sales tax owed.
- Combining pass-through credits on one form: File a separate IA 4136 for each pass-through credit received.
- Using special allocations: Pass-through credits must be allocated according to members’ shares of entity earnings.
Questions people ask
Can I claim a credit for dyed diesel fuel?
No. Dyed diesel is always sold free of Iowa fuel tax, so no Fuel Tax Credit may be claimed for it.
Does fuel used in a watercraft qualify?
All undyed special fuel used in watercraft qualifies. Gasoline qualifies only if the watercraft was used by a commercial fisher licensed and operating under an owner’s certificate for commercial fishing gear issued under Iowa Code section 482.7.
What changed for E-15 or higher fuel in 2025?
The rate increased from $0.255 per gallon for January 1 through June 30, 2025, to $0.265 per gallon starting July 1, 2025. All other fuel tax rates are unchanged.
How do I calculate sales tax on fuel claimed for the credit?
For each row, subtract the applicable Iowa fuel tax per gallon from the average fuel cost per gallon. Multiply that result by claimed gallons, then by 6%. Fuel used in exempt activities, such as farming and processing, is excepted.
What if I earned a credit and also received one from a pass-through entity?
Calculate your earned credit on lines 1 through 7 and enter the pass-through credit on line 8. Report each credit separately.