The Internal Revenue Service (IRS) released a new excise tax rate calculation for propane to account for the energy content disparity between propane and gasoline, the National Propane Gas Association (NPGA) reports. The revised rate is 13.5 cents per gallon and represents a 26 percent reduction from the previous rate.
The new rate also applies to propane autogas, according to NPGA.
The excise tax equalization, which became law in 2015, applies to propane sold starting Jan. 1, 2016, NPGA adds. According to the IRS, propane has about 74 percent of the energy content of gasoline.
Claimants must now complete the new calculation within Form 720, which covers quarterly federal excise tax returns.
In addition, the calculation determining the Alternative Fuel Tax Credit was modified to reflect the IRS’ revision of the excise tax rate calculation on propane. Propane is now eligible for about a 37-cents-per-gallon tax credit, according to NPGA.