Texas Fuel Tax Bond
Texas is one of the few states that hands you the exact math. Your Motor Fuels Tax Continuous Bond — filed with the Comptroller on Form AP-111 — is simply your tax-free gallons multiplied by $0.40, twice the state's $0.20-per-gallon fuel tax rate, floored at $30,000 and capped at $600,000. Get that one number right and the rest of the filing is routine.
Your Texas bond amount: tax-free gallons × $0.40
Texas hands you the arithmetic outright. The motor fuels tax runs $0.20 per gallon, and the statute secures two times the maximum tax that could accrue on the tax-free gallons you acquire in a reporting period — so the calculation collapses to a single multiplier: $0.40 a gallon. Run that number, carry it to Item 27 of Form AP-133 (the fuels tax license application), and you have the exact penal sum your AP-111 bond gets written to — no estimate, and nothing to negotiate with an underwriter over the amount.
How Texas sizes a Motor Fuels Tax Continuous Bond
$0.40 is twice the $0.20/gallon Texas motor fuels tax rate. Entered as Item 27 on Form AP-133 and written into the AP-111 bond. Subject to a $30,000 statutory minimum ($10,000 for a dyed diesel bonded user) and a $600,000 maximum. Source: Texas Comptroller Form AP-133; Tex. Tax Code § 162.111(b) (gasoline) and § 162.212(b) (diesel fuel).
Two edges of the math matter as much as the formula. A small operator handling, say, 50,000 tax-free gallons calculates $20,000 — but the bond can't be written below the $30,000 floor, so that's what they file. A high-volume supplier whose gallons imply $900,000 is nonetheless capped at the $600,000 ceiling unless the Comptroller documents undue risk. Nail down which side of those bounds you land on before you apply, because the bond has to match the approved figure to the dollar. Curious what the premium on that penal sum looks like? Our guide to how surety bond cost is calculated walks through the credit and financial factors carriers weigh.
What Texas law actually requires
The security requirement lives in the Texas Tax Code's motor fuels chapter — split across parallel gasoline and diesel provisions that run the same formula. It sets the floors, the ceiling, and the factors the Comptroller weighs — and it's the authority your surety underwrites against.
Official Texas Requirements
"The bond required of a license holder must be in an amount equal to two times the maximum amount of tax that could accrue on tax-free [gasoline / diesel fuel] purchased or acquired during a reporting period, with a minimum of $30,000 (or $10,000 for a dyed diesel fuel bonded user) and a maximum of $600,000 unless the Comptroller determines that a greater amount is needed because of undue risk."Texas Comptroller of Public Accounts • Tex. Tax Code § 162.111(b) (gasoline) and § 162.212(b) (diesel fuel)
Both sections direct the Comptroller to set security based on the tax that has or is expected to become due, the applicant's history as a license holder under Chapter 162 and its predecessor law, and the need to protect the state against failure to pay. That last clause is why the amount isn't frozen at issuance — more on the re-rating and release path below.
Not every Texas fuel license is bonded the same way
The $0.40 formula governs every formula-based license class — suppliers, permissive suppliers, distributors, importers, exporters, and blenders — whether the fuel is gasoline (§ 162.111(b)) or diesel (§ 162.212(b)). The dyed diesel bonded user sits on its own lower floor, and the $600,000 ceiling caps every class alike. Where your license lands decides which floor and section apply:
How Texas sets the bond floor by license class
Tax Code §§ 162.111(b), 162.212(b) minimums and ceiling
Dyed diesel bonded user
$10,000
The lowest statutory floor Texas sets — reserved for a dyed diesel fuel bonded user.
Suppliers · distributors · importers
$30,000
Minimum for the formula classes: 2× tax on tax-free gallons, floored here if the math is lower.
Aviation fuel dealer
$30,000
Licensed as its own class on Form AP-133 — same $0.40/gallon formula and $30,000 floor as the other formula classes.
Statutory ceiling
$600,000
The maximum the Comptroller writes — exceeded only on a documented finding of undue risk.
Amounts and bases per Tex. Tax Code § 162.111(b) (gasoline), § 162.212(b) (diesel fuel), and Form AP-133. Formula classes: supplier, permissive supplier, distributor, importer, exporter, blender, and aviation fuel dealer — each its own license class on AP-133.
A practical consequence: because gasoline and diesel are separately licensed, a business that both distributes gasoline and imports diesel files two Motor Fuels Tax Continuous Bonds, each sized from that fuel's own gallons. Add a dyed diesel bonded-user role and that's a third bond on its own $10,000 floor. Tell us your license mix and we'll map every AP-111 you owe in one pass.
Why the AP-111 is a “continuous” bond
The word in the form's title does real work. Unlike a term bond you renew each year with a fresh document, the Motor Fuels Tax Continuous Bond is written once and stays in force from its effective date — extending year to year as a new and separate obligation for each calendar year it remains active.
One instrument, rolling coverage
You don't re-file a new AP-111 every year. The bond carries forward automatically, which is why keeping the premium current with your surety matters more than chasing renewal paperwork with the Comptroller.
A fresh obligation each year
Each calendar year the bond is in force is treated as its own obligation. A lapse doesn't erase liability that accrued in prior years, and the state can look to the bond for tax owed while coverage was required.
The bond instrument names the State of Texas as obligee, payable at Austin, with the Comptroller of Public Accounts as the administering agency that receives and files it — not the DMV or a transportation agency, as it is in some other states. That distinction decides which office your executed bond gets filed with, and getting it wrong is the most common reason a Texas fuel bond filing bounces.
Getting the bond released: the four-year rule
A Texas fuel tax bond isn't necessarily forever. Tax Code §§ 162.111(b) and 162.212(b) give compliant license holders a defined path off the requirement — a feature most competitor pages skip entirely.
Four consecutive years
Comply continuously with the bond conditions for four straight years and you become eligible to ask the Comptroller to return, refund, or release the bond.
Request, don't assume
Release is on request, not automatic. The four-year mark is when you may file the ask — the Comptroller still evaluates it before returning the bond.
Revenue protection wins
If releasing the bond would jeopardize state revenues, the Comptroller can decline — and can reimpose a bond later even after a release.
The takeaway: keep every monthly fuels tax report on time and the tax paid, and after four clean years you have a real shot at freeing the capital or premium the bond ties up. One good way to protect that record is to treat every Comptroller notice as urgent — our guide on how to avoid a surety bond claim covers the habits that keep a fuel license bondable.
Form 00-808 or 00-812: satisfying the requirement without an AP-111
The AP-111 surety bond is the usual route, but it is not the only instrument the Comptroller accepts. Texas names two specific alternatives on its own forms — and because your required amount scales with gallons, choosing between them is really a question of how much working capital you are willing to freeze at the terminal rack instead of keeping it in inventory. Our bond vs. cash deposit comparison runs that trade-off in depth; here is how the three Texas instruments line up:
| Security instrument | Texas form | What it costs you to post |
|---|---|---|
| Motor Fuels Tax Continuous Bond | AP-111 | A yearly premium only; the penal sum sits with the surety, not your bank account. |
| Cash or certificate of deposit | 00-808 | The entire $30,000–$600,000 amount, assigned to the Comptroller and locked for the license term. |
| Irrevocable letter of credit | 00-812 | The bank line you rely on to buy fuel, plus the LOC's own issuance fees and collateral. |
When your amount changes after an audit or growth, you don't always start over — a Bond Rider (Form 06-110) can amend an existing AP-111 to the new figure. We handle the rider filing when the Comptroller re-rates you.
How an unpaid fuel tax turns into an AP-111 claim
Motor fuels tax is trust money: the per-gallon excise belongs to the state the moment you collect it. That is why the Comptroller can reach the AP-111 on nothing more than an unpaid balance — no allegation of fraud, no lawsuit to win first. These are the exposures that most often mature into a bond claim:
Unremitted motor fuels excise tax
The core exposure. You removed, imported, blended, or sold fuel on which the per-gallon tax accrued, and the remittance never reached the Comptroller. The state assesses the shortfall and can demand it from the surety up to the penal sum of your AP-111.
Assessments from a Comptroller fuels audit
Texas cross-matches terminal removals, bills of lading, and license reports. When an audit turns up tax-free gallons that were never accounted for, the resulting assessment — tax plus penalties and interest — is collectible against the bond like any other unpaid liability.
Penalties and interest on late fuels tax reports
The bond answers for the full liability, not just the base tax. A pattern of late monthly reports builds a claimable balance in penalties and interest even when the underlying tax eventually gets paid.
Liability incurred after a license lapse
Continuing to move taxable fuel after the license is suspended, or letting the bond lapse mid-term, turns a filing problem into an enforcement one. The Comptroller can pursue the AP-111 for tax that accrued while coverage was required.
An AP-111 claim reroutes your tax debt — it does not erase it. The surety settles with the Comptroller, then enforces its indemnity agreement against you, so a paid claim leaves you owing the same dollars to a carrier now far more reluctant to write your next bond. Treat the AP-111 as the state's collection lever, not your cushion.
Filing your AP-111 with the Comptroller
Pin down your license and fuel type
Gasoline and diesel are licensed separately, and dyed diesel bonded users are their own class. Each needs its own AP-111. Identify every license you hold or are applying for.
Run the Item 27 number
Multiply your tax-free gallons per reporting period by $0.40, then apply the $30,000 floor ($10,000 for dyed diesel) and $600,000 ceiling. That figure is the bond amount.
Apply for the bond
We review ownership, credit, time in business, and estimated gallonage. Larger penal sums closer to the ceiling may involve business financials — smaller bonds usually don’t.
Execute and file AP-111
File the executed Motor Fuels Tax Continuous Bond with the Comptroller alongside your AP-133 application. The fuel license doesn’t activate until the bond is on file for the right amount and fuel.
Respond to re-rates with a rider
When an audit or volume growth changes your amount, file a Bond Rider (Form 06-110) or replacement bond by the Comptroller’s deadline to keep the license active.
Already know which fuel licenses you hold and roughly what you'll gallon out in a period? Send it over and we'll turn your Item 27 figure into a filed AP-111.
Start my Texas fuel bondWhat else a Texas fuel license usually carries
Fuel businesses licensed in Texas usually carry more than one of these:
Not sure how the penal sum translates to premium? See what determines your surety bond cost before you apply, or start with our bond cost calculator.
AP-111 and Item 27 questions, answered
How do I calculate my Texas fuel tax bond amount myself?
Take the tax-free gallons figure the Comptroller expects you to handle in a reporting period and multiply it by $0.40 — that is twice the $0.20-per-gallon Texas motor fuels tax rate. That product is the number you enter as Item 27 on Form AP-133, the fuels tax license application, and it is the penal sum your Motor Fuels Tax Continuous Bond (Form AP-111) must be written for. If the math lands below $30,000, the statutory minimum applies; if it lands above $600,000, the ceiling caps it unless the Comptroller finds undue risk. So a distributor projecting 1,000,000 tax-free gallons per period is looking at a $400,000 bond, while a small operator at 50,000 gallons is rounded up to the $30,000 floor.
What is Form AP-111 and how is it different from AP-133?
AP-133 is the license application — it is where you request your gasoline, diesel, or other fuels tax license and state your bond amount at Item 27. AP-111, the Texas Motor Fuels Tax Continuous Bond, is the bond instrument itself: the surety’s promise to the Comptroller that your fuel tax will be paid. You file AP-111 with, or in support of, your AP-133. The Comptroller will not activate the fuel license until the executed AP-111 is on file for the correct amount and fuel type.
Do I need a separate Texas bond for gasoline and diesel?
Yes. Texas licenses gasoline and diesel fuel separately and issues a distinct Motor Fuels Tax Continuous Bond for each. A supplier moving both products files two AP-111 bonds — one under the gasoline license, one under the diesel license — each sized from that fuel’s own tax-free gallons. A dyed diesel fuel bonded user is a further separate category with its own $10,000 minimum. Plan for one bond per fuel license, not one bond for the business.
Why does my AP-111 cite two different Tax Code sections?
Because gasoline and diesel fuel are taxed — and bonded — under separate subchapters of Chapter 162. Form AP-111’s own instructions point gasoline license holders to Tax Code § 162.111(b) and diesel fuel license holders to § 162.212(b). The two sections run the identical formula — twice the tax that could accrue on tax-free gallons, floored at $30,000 and capped at $600,000 — so the math never changes. What changes is which section your surety and the Comptroller cite, and that depends entirely on which fuel license the bond backs. A supplier bonded for both fuels will see both sections referenced across their two AP-111s.
Can I ever get the bond removed once I have it?
Yes, but only after a clean track record. Under Tax Code §§ 162.111 and 162.212, a license holder who has continuously complied with the bond conditions for four consecutive years may request that the Comptroller return, refund, or release the bond. The Comptroller is not obligated to grant it — if releasing the bond would jeopardize state revenues, the request can be declined, and the Comptroller can later reimpose a bond requirement. Treat the four-year mark as when you become eligible to ask, not a guaranteed release date.
Does a motor fuel transporter need this bond in Texas?
No. Texas does not impose a fuel tax bond requirement on motor fuel transporters — the bond attaches to the licenses that owe the excise tax, such as distributors, suppliers, importers, exporters, blenders, and dyed diesel bonded users. If you only transport fuel for others and do not hold a taxable fuels license, you are outside the AP-111 requirement, though you still carry your own carrier and permit obligations.
All content is researched from official state and federal sources (.gov) and verified before publication. BuySuretyBonds.com works with Treasury-certified, A-minimum rated surety carriers serving all 50 states.
General information, not legal, tax, or underwriting advice. Texas fuel license classes, bond amounts, forms, and the tax rate are set by the Texas Comptroller of Public Accounts and the Texas Tax Code and can change. Confirm your current requirement and the exact Item 27 amount with the Comptroller, and request a quote for your specific AP-111 bond and fuel type.
One continuous AP-111 — filed right, and released after four clean years
Tell us your Texas license class and tax-free gallons. We'll size the Motor Fuels Tax Continuous Bond, shop it across surety markets, file it with the Comptroller, and handle the Bond Rider (Form 06-110) when an audit re-rates you — then help you petition for release once you've cleared four compliant years. Free quote, no obligation.
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