Trump order lets truckers use cheaper dyed diesel on highways and defers federal diesel tax
A Monday executive order temporarily allows off-road “red” diesel on public roads and tells Treasury to defer the federal excise tax on it through year-end. Diesel’s national average topped $6 a gallon for the first time in September.
What was signed: President Donald Trump signed an executive order Monday to temporarily allow off-road “dyed” diesel to be used on highways and to defer the federal excise tax that would normally apply, according to a White House fact sheet. The order directs the Treasury secretary, in consultation with the secretary of war, to defer payment of that tax for the rest of 2026 without interest or penalties, and to “explore pathways to eliminate the obligation to pay the deferred taxes.”
What dyed diesel is: Diesel is taxed by how it is used. Fuel for farm equipment, construction machinery and heating is exempt from highway fuel taxes and is dyed red so officers can spot it; using it on public roads is normally treated as tax evasion and can bring fines, CNBC reported. The federal highway tax on diesel is 24.4 cents a gallon, CNBC said.
Why now: The U.S. national average price of diesel topped $6 a gallon in September for the first time, as supply disruptions tied to the wars in Ukraine and Iran pushed up transportation costs, CNBC reported. The White House blamed tight global supply and limited refining capacity and said truckers could save more than $100 per fill-up. It also cited an agreement for Europe to release 100 million barrels of refined diesel from strategic reserves.
The state piece: State fuel taxes and roadside enforcement are set by states, not by this order. The order tells the Transportation and Agriculture secretaries to work with states and industry on access to dyed diesel, and directs the White House intergovernmental affairs office to encourage more states to adopt matching policies, the fact sheet says. Several states had already relaxed dyed-diesel rules this year, CNBC reported.
What this means: For drivers, the federal tax is deferred, not repealed, unless Treasury finds a way to cancel it; whether using red diesel on the road is penalty-free also depends on each state’s rules. This is general information, not legal or tax advice.
Sources
- The White House — Fact Sheet: President Donald J. Trump Promotes Diesel Affordability
- The White House — Emergency Tax Relief on Diesel Fuel (executive order)
- CNBC — Trump allows cheaper, dyed diesel on highways to blunt historic fuel-cost spike ahead of midterms
- POLITICO — Trump plans executive order seeking to bring down high diesel costs