President Donald Trump signed an executive order on October 5 that lets truckers and farmers use red-dyed diesel on public roads for the rest of the year and puts off the federal tax on it. Dyed diesel is the same fuel as regular diesel. It is dyed red to mark it as tax-free and meant for tractors, construction machinery and other off-road equipment, and using it on highways is normally illegal. The White House says the order will "temporarily allow off-road 'dyed' diesel for highway use and defer the applicable Federal excise tax, lowering costs for Americans."
The tax is postponed, not forgiven. The order tells the Treasury to stop collecting the 24.4-cent-per-gallon federal diesel tax on that fuel through the end of 2026, with no interest or penalties, and the IRS to waive the usual penalties for highway use. It also directs officials to "explore pathways to eliminate the obligation to pay the deferred taxes," which could require Congress. Until that happens, the money is still owed.
Who saves, and how much
Diesel has been the fuel hit hardest this year. It rose from $3.76 a gallon before the Iran war to a record $6.53 on September 22, according to AAA, and averaged $6.32 on Tuesday. A trucker filling an 18-wheeler with 250 gallons pays about $1,575, CNN calculated. Skipping the federal tax alone saves about $60 on that fill; where states also waive their diesel taxes, which average 35.5 cents a gallon, the saving is about $150. Ten states, including Texas, Oklahoma, North Carolina and Alabama, had already loosened their dyed-diesel rules between September 23 and October 2, according to the research firm ClearView Energy Partners, and the order asks officials to bring more states along. Trump announced the order at a campaign event in Nebraska and told the crowd, "We're not going to need it long, I hope," predicting that prices would soon be "plummeting."
People in the fuel business called the relief small and late. "It's a Band-Aid," said John Tirado, who runs a trucking company in New Jersey and the fuel supplier Summa Energy. "And it comes late. Prices have been climbing since March." Patrick De Haan, head of petroleum analysis at GasBuddy, called it "not really a needle-mover," warning that getting dyed diesel to truckers across state lines is harder than it sounds. It is also unclear how much of the saving will reach consumers.
The underlying problem
Taxes are not what drove diesel up. Refineries in the Middle East and Russia have been damaged by war, Ukraine has vowed to keep striking Russian refineries, China is holding back fuel exports, and U.S. refineries are already running flat out. "This does save the consumer money in the short term, but it doesn't solve the underlying issue," said Andy Lipow, president of Lipow Oil Associates. The White House blames tight global supply from the war in Ukraine and a lack of refining capacity. The Group of Seven has also agreed to release 100 million barrels of diesel and crude from reserves.
Sources: the White House fact sheet, October 5, 2026; CNN and CNBC, October 5 and 6, 2026; AAA price data; ClearView Energy Partners via CNN.