Agricultural Fuel Credit (code 47)

Farmers and ranchers may claim a refundable tax credit on their Utah tax returns for tax paid for gasoline and undyed diesel fuel used exclusively for commercial, nonhighway agricultural use.

The Utah State Tax Commission has ruled this credit is limited to gasoline or undyed diesel fuel used in stationary or self-propelled farm machinery used solely for nonhighway (not on public roads) agricultural purposes. The 2007 state gasoline and diesel fuel taxes were 24.5 cents per gallon.

The refundable tax credit is limited to those involved in commercial farming activities:

• producing agricultural crops for resale,
• raising livestock and other animals useful to man, or
• performing custom agricultural work using nonhighway farm equipment.

Activities that do not qualify for this credit include, but are not limited to, the following: golf courses, horse racing, boat operations, highway seeding, vehicles registered for highway use, hobbies, farming for personal use, etc.

Credit is not allowed for purchases of dyed diesel fuel (dyed diesel fuel purchases are exempt from fuel tax), nor for fuel used in any vehicle registered for highway use.

The Tax Commission advises agricultural operators to keep legible copies of purchase invoices, receipts, etc., to substantiate the tax credits. The receipts should show:

1. The name and address of the taxpayer;
2. The number of gallons and type of motor fuel;
3. Where the fuel was purchased; and
4. The date and amount of the purchase.

Canceled checks do not meet the above criteria to adequately substantiate off-highway fuel purchases.