WASHINGTON, D.C. — President Donald Trump signed an executive order on October 5 temporarily waiving the restriction that limits red-dyed diesel to off-road use only, allowing anyone to purchase and use the tax-exempt fuel in highway vehicles through December 31, 2026 — with the applicable federal excise tax deferred through the end of the year with no interest or penalties.
Trump announced the move during a Monday appearance in Nebraska before signing the order. “For many years, farm vehicles, construction equipment, and other off-road vehicles have used what is known as ‘red-dye’ diesel, which is exactly the same as normal diesel, but is sold tax-free for off-road vehicles and big trucks. Tonight, I am going to sign a historic Executive Order to officially waive the off-road requirement and allow anyone to purchase tax-free red-dye diesel for any reason.”
With the federal diesel excise tax at 24.4 cents per gallon, the White House estimates the order could save approximately $60 on a 250-gallon fill-up, and potentially over $100 per trip to the pump in states that match the federal action. The order also directs the Secretary of Agriculture to coordinate with agricultural cooperatives, rural fuel distributors, and farm supply organizations to ensure adequate distribution of dyed diesel in high-demand areas.
The executive order also directs the IRS not to impose penalties for the on-highway use of dyed diesel during the covered period and addresses relief from penalties for failure to make semimonthly tax deposits. The Secretary of the Treasury has been directed to issue guidance implementing the order within five days, and to explore avenues — including legislation — to eliminate the deferred tax obligations entirely.
The order cited restricted global diesel supply and record prices as the driving factors. “Farmers and truckers are essential to the American way of life. Restricted global diesel supply has led to rising prices, and these key industries have been particularly hard hit,” the order states.
The White House said the administration and state governors can exercise enforcement discretion to halt inspections and waive tax liability for on-road use of dyed diesel during the relief period. FMCSA will continue all compliance enforcement measures including audits, inspections, and monitoring programs.
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