Inland Waterway Tax

What Is the Inland Waterway Tax?

Inland waterways in the United States have about 578 million tons of cargo moved by barges annually. These inland waterways cover about 12,000 miles in the US and are commonly used to transport cargo safely and securely, by various types of vessels.

The Inland Waterway Tax, otherwise known as Waterway Use Tax or Inland Waterway User Fee is a tax collected from the Inland Waterways Trust Fund to vessel operators for use of inland marine highways in the United States.

There are a variety of goods moved through these waterways that include steel, iron, cement, project cargo, and and even intermodal containers. Inland Water Way taxes are charged on a per-gallon basis and apply to certain types of vessel. 

What Is the Inland Waterway Tax Rate?

The current Inland Waterway Tax Rate is $0.29 per gallon. Back when the tax was first implemented through the Revenue Act of 1978, the initial tax rate was $0.04 per gallon. 

There was an increase from 1981 to 1986 when it reached $0.10 per gallon. Another round of increases followed in 1995 where the rate was further increased to $0.20 per gallon. 

What US Waterways Are Taxed?

Waterway RM RangeTax Rate
Alabama-Coosa Rivers0 – 314$.29/gallon
Allegheny River0 – 72$.29/gallon
Apalachicola-Chattahoochee and Flint Rivers0 – 107.8 / 0 – 155 / 0 – 28$.29/gallon
Arkansas River (McClellan-Kerr Arkansas River Navigation System).0 – 448.2$.29/gallon
Atchafalaya River0 – 116.8$.29/gallon
Atlantic Intracoastal Waterway (A.I.W.W.)Main and alternate channels, and all adjoining bays and sounds, regardless of depth$0.29/gallon
Black Warrior-Tombigbee  Rivers2.9 – 34 / 474 – 311$0.29/gallon
Columbia River (Columbia-Snake Rivers Inland Waterways)191.5 – 330 / 0 – 231.5$0.29/gallon
Cumberland River0 – 313.5$0.29/gallon
Gulf Intracoastal Waterway (G.I.W.W.)Main and alternate channels, and all adjoining bays and sounds, regardless of depth$0.29/gallon
Illinois Waterway0 – 291 $0.29/gallon
Kanawha River0 – 90.6$0.29/gallon
Kaskaskia River0 – 36.2$0.29/gallon
Kentucky River0 – 258.6$0.29/gallon
Lower Mississippi River233.9 – 953.8$0.29/gallon
Upper Mississippi River953.8 – 1,811.4$0.29/gallon
Missouri River. 0 – 734.8$0.29/gallon
Monongahela River0 – 981$0.29/gallon
Ouachita-Black Rivers0 – 351$0.29/gallon
Pearl River0 – 58$0.29/gallon
Red River0 – 236$0.29/gallon
Tennessee River0 – 652$0.29/gallon
Tennessee-Tombigbee Waterway0 – 652$0.29/gallon
White RiverFrom Tennessee River to Warrior River$0.29/gallon
Willamette River21 – 194$0.29/gallon

Please use the above table for reference only. For information on all rivers and RM values, please check “Tax on fuel used in commercial waterway transportation” at 26 CFR § 48.4042-1.

What are Inland Waterway Tax Exemptions?

As with many other shipping taxes, there are certain exceptions where these taxes do not apply. Below are the Inland Waterway Tax exemptions:

  • Deep-draft ocean-going vessels – vessels are exempt if they have a draft of more than 12 feet or if the vessel is designed primarily for high-seas voyages. 
  • Passenger vessels – vessels that have a primary purpose of transporting people across inland waterways are also exempt from the tax.
  • Use by State or local government – vessels which are transporting property on behalf of a state or local government are not not required to pay an inland waterway tax. 
  • Use in moving LASH and Seabee ocean-going barges –  vessels that are classified as LASH (Lighter-aboard-ship) and SEABEE (United States Naval Construction Battalions) ocean-going barges are also exempt.

How Is the Inland Waterway Tax Charged?

The Inland Waterway Tax is paid by the vessel operator to the Inland Waterways Trust Fund, which is a fund run by the U.S. Treasury.

Revenue generated from the Inland Waterway Tax is managed by the Inland Waterways Trust Fund. Its main task is to finance construction and rehabilitate waterway related projects. 

Moreover, part of the revenue that is generated by the Inland Waterway Tax is also used for maintenance and construction of dams. This also includes the funding for civil and engineering works relating to waterways in the United States.

What Records Must Vessel Operators Keep?

To fully comply with the Inland Waterway Tax laws, all vessel operators are required to keep and update records, in order to verify and ensure accurate data for tax collection.

Below is a list of all the items vessel operators must keep track of and officially log into their records:

  • Quantity of fuel and date of purchase (taxable and nontaxable). This also applies to fuel in storage or in fuel tanks on a vessel.
  • Vessel identification number or name of vessel
  • Departure time and location, route traveled, intended destination, and arrival time for each vessel