White House Pushes Dyed Diesel Relief

WASHINGTON (DTN) -- President Donald Trump signed an executive order Monday at a rally in Grand Island, Nebraska, directing federal agencies to provide temporary tax and penalty relief tied to the use of dyed diesel in highway vehicles.

Rather than pursuing a diesel export ban, the Trump administration is focusing on expanding access to dyed diesel, regular diesel fuel that is dyed red to indicate its non-tax status on farms.

Farm groups have pressed for fuel-cost relief during harvest as diesel prices climbed and supplies tightened.

The order directs the Internal Revenue Service, within five days, to announce whether it will continue to impose penalties when dyed diesel fuel is sold for use, or used, on highways between Oct. 5 and Dec. 31.

The order also could allow eligible taxpayers to defer certain federal diesel-tax payments incurred without penalties or interest, if the Treasury Department determines existing law permits such relief.

The federal excise tax on highway diesel fuel is 24.4 cents per gallon.

The order does not eliminate the tax and acknowledges deferred taxes may still ultimately be owed. It directs Treasury to determine whether relief is available under Section 7508A of the Internal Revenue Code and, if so, defer payment of covered diesel taxes.

Then, "The Secretary shall explore avenues, including legislation, to eliminate the obligation to pay the amounts deferred," the order states.

"The typical trucker will save over $100 every time they fill up," Trump said during the rally.

Who applies matters, said Patrick De Haan, an analyst at GasBuddy, on X. "This is really aimed at truckers, local haulers and diesel pickup owners," he said.

Based on the federal diesel excise tax of 24.4 cents per gallon, a trucker filling a 200-gallon tank could save about $49 per fill-up at a $6.20 per gallon rate, while savings would approach $100 on a roughly 410-gallon fill-up.

Class 8 over-the-road semi-trucks typically use dual diesel fuel tank setups with a total capacity ranging from 200 to 300 gallons, according to the Used Truck Association.

Achieving more than $100 in savings would generally require filling more than 400 gallons.

Beyond tax relief, the order directs USDA to coordinate with agricultural cooperatives, fuel distributors and farm supply organizations to help ensure adequate supplies of dyed diesel in high-demand regions. They are also directed to encourage states to adopt similar relief measures, following actions already taken by states including Nebraska and Louisiana.

(See "States Allowing Dyed Diesel on Road" here: https://www.dtnpf.com/….)

HIGHWAY FUNDING CONCERNS

The American Soybean Association welcomed the effort to lower fuel costs but urged the administration to provide certainty for farmers.

In a statement, ASA said it "urges the administration to ensure farmers do not have to pay future deferred taxes for fuel use and are held harmless for residual dyed diesel that may remain in fuel tanks following the expiration of this Order on Dec. 31, 2026."

The group also encouraged farmers to maintain records documenting dyed diesel purchases and use during the relief period in case deferred taxes ultimately become due.

At the same time, ASA cautioned that reduced highway fuel-tax collections could affect road and bridge funding supported through state transportation programs and the federal Highway Trust Fund.

The organization called on policymakers to preserve the long-term solvency of the fund while ensuring that "timely repairs and improvements to our nation's roads and bridges" are not compromised.

"We're not going to need it long, I hope," Trump said on Monday.

-- Emergency Tax Relief on Diesel Fuel Executive Order: https://www.whitehouse.gov/…

Jake Zajkowski can be reached at jake.zajkowski@dtn.com

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