Taxation of Compressed Natural Gas

CNG is taxed at a rate of $0.001974 per cubic foot (CF) or 25 cents per gasoline gallon equivalent (GGE).

CNG is also subject to the Petroleum Debt Service Surcharge, which results in the combined tax rate of $0.00225 per cubic foot.

GGE is 5.66 pounds of natural gas or 126.67 CF as defined by the National Conference on Weights and Measures.

Rates are subject to change. Visit Petroleum Tax Fuel Excise Rates and Fees for the latest rates.

Complete the Alternative Fuel Tax calculation section in your Minnesota Petroleum Tax Return to report and pay the Motor Fuel Excise Tax each month.

You must report CNG on the tax return in cubic feet.

There are multiple methods of measuring a taxpayer’s use of CNG.

Dedicated CNG Meter

If you have a dedicated CNG meter at your fueling station, take the month end meter reading and subtract the prior month’s month-end meter reading. Report the resulting cubic feet on your tax return.

If your meter measures at different level, such as CCF (100 cubic feet) or MCF (1,000 cubic feet), you need to convert it to CF.

If it is in CCF (100 cubic feet), multiply by 100 and report that number on your tax return.

If it is in MCF (1,000 cubic feet), multiply by 1000 and report that number on your tax return. 

Retail or Private Pump

If you have a retail pump or private pump that reports GGEs of CNG for each disbursement, take the total GGEs for the month and multiply it by 126.67 to get your total cubic feet. Report that number on your tax return.

Monthly Utility Bill

If you are using your monthly utility bill from your natural gas provider, use only the dedicated meter for motor fuel and verify that the unit of measure reported on the bill is in CF. If it is in CF, report that number on your tax return.

If it is in CCF (100 cubic feet), multiply by 100 and report that number on your tax return.

If it is in MCF (1,000 cubic feet), multiply by 1000 and report that number on your tax return.

If it is in therms, you must convert therms into CF per 900 BTUs (British Thermal Units).

To determine CF per 900 BTUs, multiply the therms by 100,000, then divide that total by 900. Report that number on your tax return.