Is Diesel Considered Gasoline? Key Differences Explained

Oct 27 ,2026

Is Diesel Considered Gasoline? Key Differences Explained

No, diesel is not gasoline. Though diesel and gasoline belong to the same category of petroleum fuels, there is a separate classification of diesel and gasoline under the federal excise tax by the Internal Revenue Service (IRS).

According to the Internal Revenue Code (IRC), the two fuels are subjected to the federal fuel excise tax and are included under the Fuel Taxes section of Form 720, the Quarterly Federal Excise Tax Return.

We can examine how the tax differs on each type of fuel, how the IRS views each one, and the tax classifications that should be chosen on Form 720.

What Is Diesel Fuel Tax?

Diesel fuel tax refers to the excise tax imposed by the United States federal government on some specific removals, entries, and sales of diesel fuel, as defined in IRC Section 4081. Generally, the definition of diesel fuel is that which is a liquid that is fit for usage in a diesel engine powered highway vehicle or train, and this includes transmix.

What Is a Gasoline Fuel Tax?

The gasoline fuel tax is an excise tax levied on certain removals, entries, or sales of gasoline as provided for by Section 4081 of the Internal Revenue Code (IRC). With respect to federal tax purposes, gasoline includes any product that is commercially recognized as such and is sold as gasoline having an octane number of not less than 75.

Read our blog on Federal Gasoline Tax rates to know more details

Key Differences Between Diesel Tax and Gasoline Tax

Despite similarities in Federal Fuel Excise Taxes for diesel and gasoline, there are numerous differences in the way the IRS regulates these two fuels.
The following comparison explains these differences based on IRS Publication 510 and the current Form 720 instructions.

Categorization	Diesel Fuel	Gasoline Fuel
Standard federal excise tax rate	$0.244 per gallon (24.4 cents).	$0.184 per gallon (18.4 cents).
Governing tax provision	IRC Section 4081, with applicable exemptions under Section 4082.	IRC Section 4081, including special rules for gasoline blendstocks.
IRS fuel definition	Liquid suitable for use in a diesel-powered highway vehicle or train, including transmix, subject to specified exclusions.	Products commonly or commercially known or sold as gasoline, with an octane rating of at least 75 and suitable for motor fuel use; includes certain blends and blendstocks.
When the tax applies	Generally, upon taxable removal from a terminal or refinery, entry into the United States, or certain sales.	Generally, upon taxable removal from a terminal or refinery, entry into the United States, or certain sales.
Person liable for tax	Depending on the transaction, the position holder, refiner, enterer, seller, or blender may be liable.	Depending on the transaction, the position holder, refiner, enterer, seller, or blender may be liable.
Fuel-specific exemptions	Qualifying dyed diesel transactions are exempt from the regular diesel excise tax, although the LUST tax generally applies.	Certain gasoline blendstock transactions may be exempt from the regular gasoline excise tax or subject only to the LUST tax when IRS requirements are satisfied.
Nontaxable uses	Certain farming, off-highway business, export, and other qualifying uses may support a credit or refund.	Certain farming, off-highway business, export, and other qualifying uses may also support a credit or refund.
Special fuel treatment	Qualifying diesel-water fuel emulsions may receive a reduced rate; dyed diesel has separate reporting rules.	Gasoline blendstocks have special tax rules, and aviation gasoline is separately classified and taxed.
Blending rules	Blending biodiesel with previously taxed diesel outside the bulk transfer/terminal system may create additional taxable gallons.	Blending alcohol with previously taxed gasoline outside the bulk transfer/terminal system may create additional taxable gallons

Understanding the Differences in Tax Exemptions

Tax exemptions are an important part of federal fuel excise tax reporting, particularly when fuel is intended for a nontaxable purpose.
1. Dyed Diesel Fuel Exemptions
IRC Section 4082 provides that diesel fuel that is dyed in accordance with IRS standards may be exempted from the standard diesel excise tax provided all the relevant registration and transaction criteria are met.

Nevertheless, even qualified dyed diesel is still subject to the Leaking Underground Storage Tank (LUST) tax of $0.001 per gallon, unless there is any relevant exception like exports.

A highway use of colored diesel fuel is likely to attract extra taxes and penalties based on Internal Revenue Code sections such as IRC Section 6715.

2. Gasoline Blendstock Exemptions
Exemptions from taxes on gasoline blendstock are available under the federal taxable fuel rules, such as 26 CFR § 48.4081-4.

Some blendstock gasoline which do not result in finished gasoline production could qualify for tax exemptions provided all necessary requirements are met. This does not mean that LUST tax will not be due.

3. Credits and Refunds for Nontaxable Fuel Uses
A taxpayer is eligible to benefit from tax credit or refund on fuel as per the provisions under IRC sections 6421 and IRC sections 6427.

Examples of nontaxable uses recognized by the IRS include:

1)Fuel used on a farm for farming purposes.
2)Certain off-highway business uses.
3)Fuel exported from the United States.
4)Certain qualifying governmental and nonprofit educational uses.

Eligibility, claim procedures, and documentation depend on the fuel, its use, and the applicable IRS rules. Businesses must review Form 720 Schedule C and Form 8849 (Claim for Refund of Excise Taxes) when required.

If you are running transportation businesses you must read our blog on fuel excise tax reported on Form 720 which will give you insights of many concepts related to Fuel excise Tax

Diesel and Gasoline: IRS Numbers to Report on Form 720

Federal Excise Tax liability of the two fuel types diesel and gasoline is reported using the relevant IRS number on Part I – Fuel Taxes of Form 720. While diesel and gasoline are classified together in reporting, there are taxable activities that need to be recorded differently due to special classification of fuels.

Diesel Fuel Tax: IRS Numbers and Tax Categories

The following IRS numbers apply to diesel-related fuel tax categories listed in Form 720.

IRS Number	Tax Category on Form 720	Tax Rate Per Gallon
60(a)	Diesel, tax on removal at terminal rack	$0.244
60(b)	Diesel, tax on taxable events other than removal at terminal rack	$0.244
60(c)	Diesel, tax on sale or removal of biodiesel mixture (not at terminal rack)	$0.244
104	Diesel-water fuel emulsion	$0.198
105	Dyed diesel, LUST tax	$0.001

Gasoline Fuel Tax: IRS Numbers and Tax Categories

The following IRS numbers apply to gasoline-related fuel tax categories listed in Form 720.

IRS Number	Tax Category on Form 720	Tax Rate Per Gallon
62(a)	Gasoline, tax on removal at terminal rack	$0.184
62(b)	Gasoline, tax on taxable events other than removal at terminal rack	$0.184
14	Aviation gasoline	$0.194
119	LUST tax, other exempt removals (qualifying gasoline blendstock transactions)	$0.001

Conclusion
Diesel and gasoline are separate classes of fuel according to IRS tax codes, and therefore, have separate tax rates as well. This information can be helpful for business owners in order to determine what category of IRS taxes applies to them, as well as whether any tax exemptions could be used.

All those businesses that pay federal fuel excise taxes have to adhere to the requirements of Form 720. QuickFile720, an authorized e-filer of IRS, provides assistance to businesses in preparing Form 720 for diesel, gasoline, and other federal excise taxes.

File your Fuel Excise Tax Online With QuickFile720 today!

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