President Donald Trump signed an executive order Monday evening temporarily allowing truckers and farmers to use red-dyed diesel on public roads, a move intended to ease record-high fuel costs. The fuel is exempt from the 24.4-cent-per-gallon federal highway diesel tax, and the order defers collection of that tax through the end of 2026. The White House says truckers could save more than $100 per fill-up.
What the order changes
Red-dyed diesel is generally used in farm equipment, construction machinery and other off-road vehicles. The dye marks fuel on which highway taxes have not been paid; using it on public roads has normally been prohibited and can expose users to fines for tax evasion.
Trump’s order temporarily creates an exception for truckers and farmers. It also directs the Treasury Secretary, in consultation with the Department of War, to defer the federal excise tax on highway diesel through the end of 2026, without interest or penalties. The Treasury is further instructed to explore ways to remove the obligation to pay the deferred taxes altogether.
Why fuel costs are in focus
The U.S. national average diesel price topped $6 a gallon in September for the first time. Supply disruptions linked to the conflicts in Ukraine and Iran have driven up transportation costs, while the administration has also pointed to tight global supply and insufficient refining capacity as pressures on diesel prices and household expenses.
The higher costs reach beyond drivers buying fuel directly: diesel is widely used in freight and farming, so its price can add to the expense of moving goods and operating equipment. Bob McNally, president of Rapidan Energy, said Americans are spending about $700 million more per day on gasoline and diesel than they did a year ago. That figure captures the scale of the broader increase, though the order itself does not guarantee lower prices at the pump.
How savings could reach truckers
The potential benefit comes from access to fuel that does not carry the 24.4-cent-per-gallon highway tax, alongside the delayed tax collection. The White House estimates that truckers could save more than $100 per fill-up. Actual savings will depend on the price and availability of dyed diesel, as well as whether fuel sellers pass the tax difference on to buyers.
Deferring a tax is not the same as cancelling it: the order postpones collection, while leaving open the possibility that the payment obligation could later be eliminated. For trucking businesses weighing fuel costs, that distinction matters. The Treasury’s review could determine whether the relief is temporary cash-flow support or a lasting tax reduction.
Rules and wider supply efforts
Before the federal order, several states had relaxed restrictions on tax-exempt diesel this year as fuel prices climbed. The new federal measure broadens permission for highway use temporarily, but does not describe a permanent change to the rules governing dyed fuel. The fuel’s red marker remains important because it identifies diesel whose highway tax has not been paid.
The administration’s response also sits alongside efforts to address supply. The Group of Seven nations agreed to release 100 million barrels of diesel and crude reserves after Trump pressed for action and floated a ban on U.S. fuel exports. These steps target different parts of the problem: the order changes access and tax timing, while reserve releases are intended to add fuel to the market.
Takeaway: The order offers truckers temporary access to tax-exempt dyed diesel and defers federal tax collection through 2026, but lasting savings depend on fuel prices, availability and whether deferred taxes are ultimately forgiven.
References
- cnbc.com — “Trump allows cheaper diesel on highways as fuel costs surge”
- OilPrice.com — “Trump Defers Federal Fuel Tax on Dyed Diesel as Prices Hit $6.32”
- Fox Business — “Trump lets truckers use red diesel on highways and defers fuel tax”
- Reuters — “What is red-dyed diesel and can it help lower prices, as Trump wants?”
- Agri-Pulse Communications, Inc — “Trump signs order allowing tax-free diesel use on highways”
