Trump dyed diesel order raises questions for trucking

Trucks fueling up. Carrier use of dyed diesel could be limited by truck stop access and state-by-state rules. (vitpho/Getty Images)

President Donald Trump signed an executive order Oct. 5 aimed at lowering diesel costs as high fuel prices continue to pressure trucking fleets. The order is intended to defer payment of certain taxes on off-road dyed diesel fuel, provide penalty relief for taxpayers and explore options to eliminate some tax obligations altogether, but questions linger about the practical application for fleets.

The national average price for a gallon of diesel recently hit $6.31 a gallon.

“For many years, farm vehicles, construction equipment and other off-road vehicles have used what is known as red-dye diesel,” Trump said as he signed the order during a campaign rally in Nebraska for Sen. Pete Ricketts (R-Neb.) and other Republican candidates “I’m 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.”

The executive order directs the Treasury secretary to defer certain diesel fuel tax payment obligations, provide penalty relief and work with the secretaries of Agriculture and Transportation on implementation.

However, questions about how the policy would work in practice and how much benefit it would provide to fleets remain open, said Patrick De Haan, head of petroleum analysis at GasBuddy. Fuel availability is a particular concern, he said.

“This is something that we only generally see in rural communities, more farming communities, not truck stops,” he said. “It’s almost like having race fuel at a gas station. It does happen in some locales if you’re next to a racetrack or a drag strip, but dyed red diesel is generally found in rural communities, and the stops that sell it aren’t necessarily geared for semis pulling in and dispensing hundreds of gallons.”

dyed diesel thread! ok so 1/ Trump just signed an EO letting red dyed diesel run on the road without the 24.4c/gal federal tax, for now. sounds big, but for most diesel users it likely won't change much at the pump. i'll spell out why:

— Patrick De Haan (@GasBuddyGuy) October 6, 2026

Henry Hanscom, chief advocacy and public affairs officer for American Trucking Associations, said the federation supports efforts to provide relief to truckers and other businesses facing higher diesel costs but wants more clarity on how the order will be implemented.

“The practical details here matter,” Hanscom said. “The EO directs temporary penalty relief and potential tax deferral, not outright tax forgiveness. We look forward to carefully reviewing the IRS’ implementing guidance once it is available to better understand how this relief will work in practice. Carriers need clear federal and state guidance on eligibility, reporting and any taxes that remain payable.”

Hanscom added that broader use of dyed diesel would not address the underlying supply issues driving fuel prices higher.

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Hanscom 

“Dyed diesel also comes from the same underlying supply, so expanding its highway use does not create additional fuel or address the underlying supply crunch that is driving prices higher,” he said. “Our priority is meaningful, reliable relief that lowers operating costs without creating new compliance burdens or undermining the roads and bridges our industry depends on.”

Several states, including Nebraska, North Carolina, Texas and Indiana, already have taken steps to allow on-road use of dyed diesel. But De Haan said a truck using dyed diesel legally in one state could cross into a state that has not relaxed restrictions and run into enforcement issues.

“If you cross the state line from a state that has relaxed enforcement into a state that has not, you may be subject to various citations, various tax charges, etc.,” De Haan said. “So anyone that’s crossing a state boundary, or even has the chance to cross one, is probably not going to be running for this discounted fuel given the complexities of where they’re traveling.”

Illinois Gov. Pritzker joins the dyed diesel bandwagon- relaxing enforcement, allowing off-road diesel on roadways. won't do a whole lot given limited availability of dyed diesel and anyone crossing state boundaries have complications, but worth mentioning.

— Patrick De Haan (@GasBuddyGuy) October 7, 2026

Diesel prices topped $6.50 a gallon for the first time in September, increasing costs for trucking companies and farmers alike. The U.S. conflict with Iran and its impact on fuel markets has prompted greater interest in renewable diesel and other alternative fuels.

In September, Trump floated the possibility of a diesel export ban to lower domestic fuel prices but later backed away from the idea after the Group of Seven nations announced the release of up to 100 million barrels from emergency oil and diesel stockpiles.

Within five days of the order being signed, the treasury secretary, in coordination with the defense secretary, must determine whether relief is authorized under federal law and identify the taxpayers affected, according to the order. The Treasury Department then would establish how tax payments could be deferred and direct the IRS to provide penalty relief for dyed diesel sold between Oct. 5 and Dec. 31.

The transportation secretary, working through the Federal Motor Carrier Safety Administration, also is directed to coordinate implementation with state governments, industry stakeholders and labor groups.

Those details will matter for fleets that elect to use the fuel in their trucks, De Haan said.

“It draws a lot of uncertainty over if somebody’s just going to suddenly get a tax bill, right?” De Haan said. “When you hear deferred, it’s like ... ‘Am I going to have to pay it later?’ We haven’t gotten a whole lot of clarity on that, and that’s a little bit of a risk that stands out in my mind.”

He added, “Uncertainty, ambiguity is not good when you’re talking about companies that use hundreds of gallons of diesel on a daily basis.”