Red-dyed diesel on highways: federal fine waived to Dec. 31, 24.3¢ tax only deferred
The executive order signed on October 5 has been reported as opening tax-free red diesel to every driver. The text is narrower. It tells the IRS not to fine anyone for dyed diesel used on the highway from October 5 to December 31, 2026, and it defers, rather than cancels, the 24.3-cent federal tax owed on that fuel. State rules are untouched: 10 states have their own waivers, nearly all for farm and timber vehicles, and in five of them the state tax is still due. Here is what that means at the pump, with the official tax rates.
Can you put red diesel in your car or pickup now?
Federally, you will not be fined for it between October 5 and December 31, 2026. You will still owe the federal tax later, and your state's rules have not changed unless you farm or haul timber in one of 10 states.
Dyed diesel is ordinary diesel with a red dye added at the terminal to show that no highway tax has been paid on it. It is sold for tractors, construction equipment, generators, boats and heating. Putting it in a road vehicle normally brings a federal penalty of at least $1,000 and the tax owed on the fuel.
The order President Trump signed on October 5 changes two federal things for the rest of 2026. It tells the Internal Revenue Service not to impose that penalty when dyed diesel is «sold for use or used on the highway» between October 5 and December 31. And it tells the Treasury to defer payment of the tax due on that fuel, «without any penalties, interest, additional amount, or addition to the tax». The relief is not yet in force on paper: the order gives the Treasury five days, until October 10, to confirm that the law allows the deferral and to have the IRS announce the penalty relief. When we checked on October 6, the IRS had not published that announcement.
federal penalty for dyed diesel on the highway, October 5 to December 31, once the IRS announces it (order, sec. 2(c))
federal tax per gallon still owed on that fuel, payable at a date the Treasury will set (sec. 2 and 3)
states with no dyed diesel waiver: their own rules and penalties are unchanged
state waivers that still collect the state tax: Alabama, Louisiana, North Carolina, Oklahoma, Texas
What the October 5 order waives, and what it does not
The executive order is two pages long. These are its operative parts, with what each one means for a driver.
| Rule | Before Oct 5 | Oct 5 – Dec 31, 2026 |
|---|---|---|
| Federal penalty for dyed fuel on the road (26 U.S.C. 6715) | $1,000 or $10 a gallon, whichever is more, multiplied for repeat offenses | Not imposed, once the IRS announces it |
| Federal tax on diesel used in a highway vehicle (26 U.S.C. 4041) | 24.3¢ a gallon, due from the user if not paid at the pump | Still owed; payment deferred with no interest or penalty |
| Date to pay the deferred tax | — | Not set yet: the Treasury's guidance must give it (sec. 3) |
| Cancellation of the deferred tax | — | Not decided: the Treasury is to «explore» it, including legislation (sec. 4) |
| State fuel taxes and dyed diesel rules | State law | Unchanged; states are «encouraged» to follow (sec. 7 and 8) |
| Truck safety inspections and audits | FMCSA and states | Continue «as provided for by law» (sec. 6) |
Executive Order «Emergency Tax Relief on Diesel Fuel», signed October 5, 2026, sections 2 to 8. Penalty amounts from 26 U.S.C. 6715(b). The deferral depends on the Treasury finding that relief is authorized under 26 U.S.C. 7508A, the provision that lets the IRS postpone tax deadlines after a qualifying event.
Why 24.3 cents and not 24.4. The federal tax on road diesel is 24.4 cents a gallon: 24.3 cents of excise plus a 0.1-cent fee for cleaning up leaking underground tanks, according to the EIA. Dyed diesel already pays the 0.1-cent fee when it leaves the terminal, the IRS instructions for Form 720 show, so what is deferred on each gallon used on the road is 24.3 cents. The White House's figure of «about $60 on a 250-gallon fill» works either way: $60.75 at 24.3 cents.
Who owes it. Under 26 U.S.C. 4041, the tax falls on the person who uses untaxed diesel as fuel in a highway vehicle. That is the driver or fleet, not the station. Deferral means that liability builds up through December 31 and has to be settled later, unless Congress or the Treasury cancels it. Keep the receipts for every gallon of dyed diesel you buy for road use: you will need them when the guidance says how to pay.
Inspections. Section 5 asks the Treasury to decide how much IRS effort should go into fuel tank sampling during the relief period and to announce it publicly. Until it does, nothing in the order stops a state officer from dipping your tank under state law.
The 10 states with their own dyed diesel waivers, and who they cover
Between September 23 and October 1, ten governors let dyed diesel onto their roads. None of the orders covers ordinary commuters, and five still collect the state tax.
| State | Who is covered | State tax | Until |
|---|---|---|---|
| Alabama | Farm and timber industries | Still owed; enforcement halted | 120 days from Sep 24 |
| Arkansas | Class 2–6 and 8 vehicles of farm or forestry operations | Order bars assessing «taxes and penalties» under the dyed fuel law | Oct 30 |
| Indiana | Farmers and timber harvesters | Order silent on the tax | Energy emergency, to Nov 4 |
| Louisiana | Class 2 (forest) and Class 5 (farm) vehicles | 20¢ still owed; penalty waived | Oct 22 |
| Missouri | Registered vehicles, strictly for agricultural purposes | Not assessed, nor penalties | Oct 30 |
| Nebraska | Hauling Nebraska farm products | No penalty; refund of tax paid on clear diesel (Form 84AG) | Dec 23 |
| North Carolina | Farming use, fuel from bulk storage | 41¢ still owed (return GAS-1259) | Dec 31 |
| North Dakota | Licensed vehicles in farm operations | 4¢ dyed rate instead of 23¢ | Nov 30 |
| Oklahoma | Farmers, ranchers, farm and timber producers | Still owed; inspections paused | 120 days |
| Texas | Farmers and truckers | 20¢ still owed (Comptroller) | No end date given |
Governors' executive orders, proclamations and letters of September 23 to October 5, 2026, and the notices of the Louisiana Department of Revenue (RIB 26-018), Nebraska Department of Revenue, North Carolina Department of Revenue (October 1) and Texas Comptroller. Oklahoma's letter now online is dated October 5 and adds forestry producers. Links in the sources section.
Everywhere else, nothing has changed. No other state had acted by October 6. Georgia has suspended its fuel tax for all drivers from September 29 to October 29, but that applies to the clear diesel at the pump, not to dyed fuel. In the other states, the federal order removes the IRS penalty but not the state one, and state fuel inspectors work separately from the IRS.
Read the scope before you fill up. Missouri limits use «strictly» to agricultural purposes. North Carolina's notice applies to dyed diesel from bulk storage used for farming. Louisiana covers two vehicle classes. A pickup used to commute or a delivery van is outside all of them, except possibly in Texas, whose proclamation names «truckers» without defining them; it is the only order that does.
How much dyed diesel saves against road diesel, per gallon and per fill
At the pump, dyed and clear diesel differ by the taxes. Here is what each case is worth with the official rates, and how much of it is only postponed.
| Case | Federal (deferred) | State (saved now) | 250-gal fill |
|---|---|---|---|
| Commuter, any state without a waiver | 24.3¢, owed later | None: state penalty applies | No legal saving |
| Missouri farm use | 24.3¢ | 29.5¢ | $73.75 saved + $60.75 deferred |
| North Dakota farm vehicle | 24.3¢ | 19¢ (4¢ instead of 23¢) | $47.50 saved + $60.75 deferred |
| North Carolina farm use | 24.3¢ | 0: 41¢ still paid | $60.75 deferred |
| Texas farmer or trucker | 24.3¢ | 0: 20¢ still paid | $60.75 deferred |
| Louisiana farm or forest vehicle | 24.3¢ | 0: 20¢ still paid | $60.75 deferred |
Our calculation. State rates are the state excise taxes in the EIA's table of federal and state motor fuel taxes (July 2026, revised August 2026), except North Dakota's 4-cent dyed rate, from Executive Order 2026-08. A 250-gallon fill is the White House's example for a truck; a pickup with a 20-gallon tank defers $4.86 of federal tax per fill.
of the $6.382 national diesel price is the 24.4¢ federal tax (EIA, week of September 28)
West Coast diesel, the highest of the EIA regions; the Lower Atlantic ($5.953) and Gulf Coast ($5.955) are the lowest
California's state diesel tax, the highest in the country; none of the waivers covers California
combined federal and state savings for farmers estimated by the USDA, across about 224.6 million harvested acres
No federal agency publishes a retail price for dyed diesel, so the real gap at a given distributor can be larger or smaller than the tax. The headline of «more than $100» per fill, used by the White House, adds the federal 24.3 cents to a state tax around 16 cents or more on 250 gallons, and it counts the deferred federal part as saved. For a farmer in Missouri or North Dakota, part of that is real now; for a farmer in North Carolina, Texas or Louisiana, all of it is a deferral.
Diesel is still near its record. The national average was $6.382 for the week of September 28, down 14.7 cents from the all-time high of $6.529 a week earlier, and $2.63 more than a year ago. Our diesel price page has the figure for each region, and the state tax table gives the diesel tax for all 50 states. Why prices are so high starts with the disruption in the Strait of Hormuz.
Where dyed diesel is sold, and what to check before you use it
Most gas stations and truck stops do not carry dyed diesel. It moves through a different channel.
1Find a seller: distributors, farm co-ops, rural off-road pumps
Dyed diesel is delivered by fuel distributors and bulk plants to farm and job-site tanks, and sold by farm supply cooperatives and some rural stations with a separate off-road pump. The order asks the Agriculture Department to work with «agricultural cooperatives, rural fuel distributors, farm supply organizations» to keep it available where demand is high (sec. 7).
2Check that your state covers you
Look up your state in the table above. If it is not one of the ten, or your vehicle and use are outside its order, the state penalty for dyed fuel on the road still applies, whatever the IRS does.
3Ask for 15 ppm nonroad diesel, not heating oil
Nonroad diesel meets the same 15 ppm sulfur limit as road diesel. Heating oil is dyed too but is not held to that limit, and higher-sulfur fuel can damage the exhaust treatment on modern diesel engines.
4Keep every receipt
The federal tax on dyed diesel used on the road is deferred, not cancelled. The Treasury's guidance will say when and how it has to be paid; you will need the gallons and dates.
5Stop on January 1
The federal relief ends on December 31, 2026, and most state orders end sooner: Louisiana on October 22, Arkansas and Missouri on October 30, North Dakota on November 30. After that, the normal penalties are back.
Timeline: dyed diesel relief, updated October 6
Newest first. We update this page when the IRS announcement and the Treasury guidance come out.
- By Saturday, October 10 (due)Deadline in the order for the Treasury to decide whether the deferral is authorized and for the IRS to announce the penalty relief.
- Tuesday, October 6No IRS announcement yet on the IRS newsroom; no EPA waiver connected to the order.
- Monday, October 5President Trump signs «Emergency Tax Relief on Diesel Fuel»: federal penalty relief and tax deferral from October 5 to December 31. The USDA estimates $640 million in savings for farmers.
- Thursday, October 1North Carolina Department of Revenue: no penalty for dyed diesel used on the highway for farming through December 31; the 41-cent state tax must be paid.
- Wednesday, September 30Arkansas (Executive Order 26-15), Missouri (26-19) and Indiana (26-34) let farm vehicles use dyed diesel on state roads.
- Tuesday, September 29North Dakota declares a diesel emergency: farm vehicles pay the 4-cent dyed rate instead of 23 cents through November 30.
- Monday, September 28Texas lifts its dyed diesel restrictions under a disaster proclamation; the state tax is still due. Oklahoma pauses dyed fuel inspections for farm producers.
- Week of September 28U.S. diesel averages $6.382 a gallon (EIA), down 14.7 cents in a week.
- Thursday, September 24Alabama halts dyed fuel enforcement for farm and timber haulers; Nebraska's Executive Order 26-21 covers farm hauling for 90 days.
- Wednesday, September 23Louisiana is the first state to waive the penalty, for farm and forest vehicles, through October 22.
- Week of September 21Diesel reaches an all-time high of $6.529 a gallon in the EIA's weekly survey.
Diesel prices this week
The national and regional diesel averages from the EIA, updated every Monday
The federal gas tax
18.4 cents on gasoline and 24.4 cents on diesel, and where the money goes
Gas tax by state
Gasoline and diesel tax for all 50 states and D.C., with the federal part added
Gas prices in North Dakota
This week's price in the state with the 4-cent dyed diesel rate for farm vehicles
Will gas prices go down?
This week's wholesale signal for gasoline, diesel and crude
Strait of Hormuz oil flow tracker
Every estimate of the oil getting through, and what it does to U.S. prices
Where these figures come from
The order and the law from the White House and the U.S. Code, tax rates and prices from the EIA, state rules from each governor or revenue department. Calculations are ours.
- The White House, Executive Order «Emergency Tax Relief on Diesel Fuel», October 5, 2026 – whitehouse.gov; fact sheet – whitehouse.gov; release with the $60 per 250 gallons example – whitehouse.gov
- U.S. Department of Agriculture, statement of Secretary Rollins, October 5, 2026 – usda.gov
- 26 U.S.C. 4041 (tax on diesel used in highway vehicles) – law.cornell.edu; 26 U.S.C. 6715 (dyed fuel penalty) – law.cornell.edu; IRS, Instructions for Form 720 – irs.gov
- U.S. Energy Information Administration, Federal and state motor fuel taxes, July 2026 (revised August 2026) – eia.gov (XLSX); Gasoline and Diesel Fuel Update, week of September 28, 2026 – eia.gov
- U.S. Environmental Protection Agency, Diesel Fuel Standards and Rulemakings – epa.gov; Fuel Waivers, checked October 6, 2026 – epa.gov
- Alabama, Governor Ivey, September 24, 2026 – governor.alabama.gov; Arkansas, Executive Order 26-15 – governor.arkansas.gov; Indiana, Executive Orders 26-34 – in.gov (PDF) and 26-33 – in.gov (PDF)
- Louisiana, Governor's release on Executive Order JML 26-090 – gov.louisiana.gov and Department of Revenue RIB 26-018 – ldr.la.gov (PDF); Missouri, Executive Order 26-19 – sos.mo.gov; Nebraska, Executive Order 26-21 – nebraska.gov (PDF) and Department of Revenue – revenue.nebraska.gov
- North Carolina, Department of Revenue dyed diesel notice, October 1, 2026 – ncdor.gov; North Dakota, Executive Order 2026-08 – governor.nd.gov (PDF); Oklahoma, Governor Stitt's letter – oklahoma.gov (PDF); Texas, Governor Abbott, September 28, 2026 – gov.texas.gov and Comptroller, diesel fuel tax – comptroller.texas.gov
- State and regional prices and tax tables: this site's EIA-based pages – where the numbers come from
Published
By Gas Price Radar newsroom
We publish the U.S. Energy Information Administration's weekly gas and diesel prices and the federal and state fuel tax rates for every state, and we read the official texts behind the changes at the pump.
Sources: Executive Order «Emergency Tax Relief on Diesel Fuel» of October 5, 2026 and the White House fact sheet; 26 U.S.C. 4041 and 6715; EIA federal and state motor fuel taxes (July 2026, revised) and Gasoline and Diesel Fuel Update; EPA diesel fuel standards and fuel waivers; the governors' orders and revenue department notices of Alabama, Arkansas, Indiana, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma and Texas, linked at the end of this article. Per-gallon and per-fill calculations are our own. This article explains the rules; it is not tax or legal advice. Photo: Tony Webster, CC BY 2.0, via Wikimedia Commons. How our prices work: Where the numbers come from.