Diesel averaged about $6.32 a gallon this week, according to AAA.
On October 5, the president signed an executive order that waives federal penalties for running red-dyed diesel, the tax-free fuel normally reserved for farm and construction equipment, in highway vehicles, once the IRS announces it (due by October 10). It also defers, but does not cut, the federal diesel excise tax on that fuel.
Here is what actually changed, in plain terms.
What the order does
The window runs October 5 through December 31, 2026. Both parts come with a condition.
Penalty relief: the IRS must announce it won’t impose federal dyed-fuel penalties for highway sale or use during that window. That announcement is due by October 10. Until then, it is not official.
Tax deferral: Treasury has until October 10 to confirm its legal authority. If it does, the tax gets pushed back, with interest and penalties waived to the extent authorized by law.
What the tax deferral is worth
The federal diesel tax is 24.4 cents per gallon. That is about $60 on a 250-gallon fill.
That is cash-flow relief now, not a tax cut. It is still owed later unless Treasury forgives it, and the order only asks Treasury to explore that.
The catches
The catches, because there are some.
First, and this is the big one for interstate fleets, the federal order does not touch state fuel taxes or penalties. Ten states acted before it, including North Carolina, Alabama, Texas, and Oklahoma, according to ClearView Energy Partners via CNN. Nebraska and Louisiana did too. Most of those orders cover only farm or timber vehicles, so general-freight fleets often don’t qualify.
Since the order, Iowa issued an October 6 proclamation for hauling farm products only. Tennessee paused enforcement for farm and forestry use through October 31. Mississippi is simply not enforcing its rule, with no formal order.
Texas kept its 20-cent state tax in place, so red diesel on Texas highways still owes the state. We have not seen South Carolina act as of this writing (October 6). Check every state on your routes before you plan around this.
Second, availability. Not every truck stop stocks dyed diesel, and the order has the Agriculture Department working with co-ops and rural distributors to keep farmers supplied in high-demand areas. Call your fuel supplier first.
Third, federal fuel rules. EPA rules still cap highway diesel at 15 ppm sulfur and prohibit visibly dyed fuel on the road unless EPA issues a waiver. None had been issued as of October 6. Ask your supplier whether their dyed fuel meets the 15 ppm limit.
Fourth, it ends December 31. After that, the normal rules come back.
What to do now
Ask your fuel supplier about dyed diesel availability and sulfur content on your routes. Track which states follow the federal lead.
And watch for Treasury’s guidance and the IRS announcement, both due October 10, plus any EPA waiver. They decide how real this relief is.
Fuel at $6.32 is brutal. At any price, though, the truck that matters most is the one that is running. A sidelined truck costs more than the tank.
Keep your trucks running. A TEXA Axone Nemo Plus Truck Kit puts truck diagnostics in your own shop, so a fault code doesn’t mean days at the dealer. Also see the TEXA Axone Voice Truck Kit, TEXA eTRUCK, and our Specials page.
Quick answers
Is dyed diesel legal on highways right now?
Federally, dyed-fuel penalties for highway use are waived through December 31, 2026, once the IRS issues its announcement, due by October 10. EPA and state rules still apply.
How much can my fleet save?
The federal diesel tax is 24.4 cents per gallon, about $60 on a 250-gallon fill. It is deferred, not cut, so it is still owed later unless Treasury forgives it.
Is the federal tax gone for good?
No. The order defers it. Treasury must confirm its legal authority by October 10 and is exploring whether the tax can be eliminated, not just postponed.
Do I still owe state fuel tax?
Probably. The federal order changes nothing at the state level, and many state orders cover only farm or timber vehicles. Check each state your trucks run in.
