Can I take a fuel tax credit for my boat or for off-road use of my motor home?
Yes and no. Although the credit isn’t available for non-business use of gasoline-powered boats, it is available for non-business (personal) use of diesel-powered boats. Also you can take the credit for diesel (but not for gasoline) used in personal-use motor homes when you’re running the diesel-powered engine or auxiliary (e.g., powering the air conditioner) off-road (e.g., in a camp ground) and also in personal-use minibikes, snowmobiles, lawnmowers, and stationary machinery like compressors, generators and pumps.
To take the 24.3 cents per gallon undyed diesel fuel credit on Form 4136, fill in the number 8 on line 3a, column (a). The definition of number 8 in the Form 4136 instructions is incomplete. The more complete definition is in 2008 IRS Publication 510, page 19 (No. 8). Be sure to keep your diesel fuel receipts as proof.
Internal Revenue Code section 4041(1)(A) imposes an excise tax on diesel fuel, but is silent on boats. Nowhere else in section 4041 are boats mentioned. Therefore, without digging further, I’m inclined to believe diesel fuel used in boat engines and some other non-highway uses is exempt and, hence, creditable.
As published in Austin Monthly, March 2003 (updated October 2009)