What is reefer fuel? Dyed diesel, the tax rules and why it never goes in your truck

What is reefer fuel, exactly?

Reefer fuel is the diesel that runs a reefer trailer's refrigeration unit. The unit on the front of the trailer has its own small diesel engine and its own tank, usually mounted under the trailer. Thermo King's Precedent S-610DE spec sheet, for example, lists a 30 or 50 gallon aluminum tank. That tank gets filled separately from the tractor.

At most truck stops you'll see a reefer pump or a separate nozzle on the diesel island. What comes out is typically dyed diesel: the same fuel as on-road diesel, colored red so anyone can tell it was sold without on-road fuel tax. The IRS requires dyed diesel to carry the notice "Dyed diesel fuel, nontaxable use only, penalty for taxable use."

Truck fuel vs reefer fuel

The fuel is chemically the same diesel. What differs is the tax, and the tax depends on what the fuel is used for.

The tax rules, with citations

Federal. IRS Publication 510 lists off-highway business use as a nontaxable use of fuel, and it specifically includes fuel used in a separate motor to run special equipment "such as a refrigeration unit." Its worked example is a refrigerated truck with a separate motor for the refrigeration unit. That's the legal basis for selling reefer fuel without the federal excise tax, which Pub 510 sets at $0.244 per gallon for diesel.

Pub 510 also covers the case where one tank feeds both the propulsion engine and the refrigeration motor: you have to figure out the share used off-highway. Most modern trailer units have their own tank, which keeps it simple.

State. States tax diesel too, and they treat reefer fuel in different ways. North Dakota's refund instructions are a clear example: a refund of state special fuel tax is available for a refrigeration unit with a separate supply tank, not for units that draw from the truck's tank, and not for dyed diesel (since no tax was paid on it). Your state's rules may differ.

IFTA. IFTA is about fuel used to propel a qualified motor vehicle. Maryland's IFTA manual, for instance, defines motor fuel by its use for propulsion. Fuel your reefer unit burns from its own tank doesn't move the truck, so it generally isn't reported, but only if your records show where it went. When a jurisdiction audits, a pile of fuel receipts with no split between tractor and reefer is a problem.

Penalties for putting reefer fuel in your truck

Using dyed fuel in a highway vehicle is a taxable use of a fuel sold for nontaxable use. Under IRC section 6715, as Pub 510 describes it, the federal penalty is the greater of $1,000 or $10 per gallon of dyed fuel involved, and it climbs for repeat violations. States add their own penalties and back taxes.

Enforcement is simple: inspectors can dip a sample from the tractor's tank at a roadside or scale inspection, and red fuel is easy to spot. Even a small amount mixed in from the wrong nozzle can show up.

Practical ways to stay clean:

• Use the reefer nozzle only with the reefer tank cap off, and the truck nozzle only for the tractor tanks.
• If your fuel island has both on one pump, read the handle before you lift it.
• If a mistake happens, don't run it. Call the fuel desk and your shop about draining the tank, and keep the receipts.

How much reefer fuel you'll use

A trailer unit burns fuel by the hour, not by the mile. EPRI describes diesel transport refrigeration units as typically 8 to 38 horsepower and burning up to about a gallon an hour. Real burn depends on setpoint, outside temperature, continuous vs cycle mode, door openings and the unit's age. Frozen loads in continuous mode on a hot day burn the most.

We cover burn rates, how long a tank lasts and how to estimate a load's reefer fuel in reefer temperature settings, pre-cooling and run time. To put a dollar figure on a specific load, use the reefer fuel burn calculator.

Reefer fuel is a real cost that doesn't appear on a rate confirmation, so it belongs in your minimum rate. Our reefer rates guide shows how to fold it into cost per mile.

Record keeping

Good records protect your IFTA return and any state refund, and they help you price loads.

• Separate receipts. Buy reefer fuel as its own transaction, or make sure the receipt splits reefer and tractor gallons.
• Hour meter readings. Note the reefer unit's hour meter when you fuel. Gallons divided by hours gives your real burn rate.
• Which unit, which trailer. If you pull more than one trailer, record which trailer's tank you filled.
• Keep them. Fuel tax records are subject to audit, so keep them as long as your base jurisdiction requires.

If you're new to the equipment itself, start with what a reefer truck is and how the unit works. When you're ready to put the reefer to work, our page on reefer loads shows how we book them.