Guide · Reference

By File720Online Editorial Team · April 17, 2026

Form 720 Excise Tax Categories Explained

Form 720 covers more than 30 federal excise tax categories across fuels, environmental taxes, communications, transportation, and manufacturing. This guide breaks down each category — who pays it, what triggers it, and current rates.

File Form 720What Is Form 720?

Quick Answer

Form 720 covers eight main excise tax category groups: taxable fuels, environmental taxes, communications, air transportation, indoor tanning, manufacturers' taxes, gas guzzler tax, and coal. You only report the categories your business is liable for.

Taxable Fuels

Schedule I, Part I
Examples

Gasoline, diesel fuel, kerosene, aviation gasoline, jet fuel, liquefied petroleum gas (LPG), compressed natural gas (CNG)

Who Pays

Refiners, importers, and terminal operators who remove fuel from the terminal rack for taxable use.

Current Rates

Gasoline: $0.184/gallon · Diesel: $0.244/gallon · Jet fuel: $0.219/gallon (rates vary by fuel type)

Environmental Taxes

Schedule I, Part II
Examples

Petroleum oil spill tax, Superfund chemical taxes (via Form 6627), imported chemical derivatives

Who Pays

Importers and domestic producers of crude oil, petroleum products, and listed hazardous chemicals.

Current Rates

Petroleum: $0.09/barrel · Superfund chemicals: varies by chemical (see IRS Publication 510)

Communications Excise Tax

Schedule I, Part III
Examples

Local telephone service, teletypewriter exchange service, toll telephone service

Who Pays

Providers of taxable communications services who collect the tax from customers as part of service charges.

Current Rates

3% of the amount paid for taxable communications services

Air Transportation Taxes

Schedule I, Part III
Examples

Domestic air passenger tickets, international departure tax, domestic flight segment fee, air freight

Who Pays

Air carriers (airlines, charter operators) and, in some cases, the persons receiving the transportation.

Current Rates

Domestic: 7.5% of ticket price + $4.80/segment · International departure: $22.10 · Cargo: 6.25%

Indoor Tanning Services

Schedule I, Part II
Examples

UV tanning beds, tanning booths — any service using UV radiation to tan skin

Who Pays

Tanning salon operators who provide UV tanning services. The tax is collected from customers.

Current Rates

10% of the amount paid for each indoor tanning session

Manufacturers' Excise Taxes

Schedule I, Part II (Form 7208)
Examples

Sport fishing equipment, fishing rods, fly fishing equipment, archery equipment (bows, arrows)

Who Pays

Manufacturers, producers, and importers of taxable sport fishing and archery equipment.

Current Rates

Sport fishing: 10% of sale price · Fishing rods/poles: 10% · Archery bows: 11% · Arrow components: varies

Gas Guzzler Tax

Schedule I, Part II (Form 6197)
Examples

Automobiles with EPA fuel economy ratings below minimum thresholds

Who Pays

Manufacturers and importers of automobiles with fuel economy below the minimum threshold.

Current Rates

Ranges from $1,000 to $7,700 depending on how far below the minimum fuel economy standard

Coal Excise Tax

Schedule I, Part II
Examples

Coal mined from underground mines and surface mines in the United States

Who Pays

Producers of coal sold from mines in the United States.

Current Rates

Underground mines: $1.10/ton (max 4.4% of sale price) · Surface mines: $0.55/ton (max 4.4%)

Schedule C: Excise Tax Credits

Schedule C of Form 720 is used to claim credits against your excise tax liability. Credits are available when excise taxes have been paid on goods or services that were later used in a nontaxable way — for example, fuel sold for export, fuel sold to tax-exempt organizations, or fuel used off-highway.

Credits on Schedule C directly reduce the net amount of excise tax you owe for the quarter. If credits exceed tax liability, you may be eligible for a refund using Form 8849. See our Schedule C credits guide for details.

Related Articles

Fuel Excise Taxes Guide

Deep dive on fuel tax categories

Indoor Tanning Tax Guide

Reporting tanning services on Form 720

Schedule C Credits Guide

How to claim excise tax credits

Frequently Asked Questions

How many excise tax categories are on Form 720?
Form 720 covers more than 30 individual excise tax line items across multiple categories including fuels, environmental taxes, communications, air transportation, indoor tanning, manufacturers' taxes, gas guzzler tax, and coal. Not every business is liable for every category — you only report and pay for the categories applicable to your business.
What is Schedule C on Form 720?
Schedule C of Form 720 is where you claim tax credits that reduce your net excise tax liability. Credits are available for excise taxes paid on fuel used for nontaxable purposes (e.g., sold for export, used off-road by governments), certain chemicals, and other qualifying transactions. Credits must be documented and cannot exceed the corresponding tax liability.
Does my business need to file Form 720 if it only owes a small amount?
Yes, generally. If your business collects or is liable for any of the excise taxes covered by Form 720, you must file every quarter — regardless of the dollar amount. There is no de minimis threshold that exempts small excise tax liabilities from filing. However, if you had zero excise tax liability for the quarter, check whether a zero return is required.
Are all Form 720 excise taxes collected from customers?
Not all. Some excise taxes are imposed on businesses (manufacturers, producers, importers) as a business cost, while others are technically imposed on customers but collected by the business as part of the service price. For example, communications excise tax is imposed on the customer but collected by the service provider. Fuel excise taxes are typically paid by the producer or importer at the point of removal from the terminal.
What is the difference between Schedule I and Schedule II on Form 720?
The IRS redesigned Form 720 to consolidate most excise taxes. The current form has two main schedules (Part I and Part II) within Schedule I, covering different categories of excise taxes. Part I covers fuels, and Part II covers everything else including environmental taxes, indoor tanning, air transportation, and manufacturers' taxes. Schedule C is used for credits.

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Disclaimer: The information provided in this article is for general informational purposes only and should not be relied upon as legal, tax, or professional advice. Tax laws and regulations are subject to change, and their application can vary based on individual circumstances. Consult a qualified tax professional or attorney for advice specific to your situation. File720Online is an IRS-authorized e-file provider and does not provide legal or tax advice.