Energy

Truckers Get Tax-Free Farm Diesel In ‘Unprecedented Step’ As Wartime Prices Head For Record Yearly Jump

(Ted Gresham via Wikimedia Commons)

President Donald Trump opened tax-free farm diesel to highway trucks, but the federal tax is only postponed and most big diesel states have not followed.

Trump signed an executive order at a campaign rally in Grand Island, Nebraska, Monday night that temporarily allows drivers to use dyed diesel — normally limited to farm equipment and other off-road uses — on highways. The order directs the Treasury Department to defer the federal excise tax on that fuel through Dec. 31 without interest or penalties and to look for ways to eliminate it, according to a White House fact sheet.

Trump called the order “another unprecedented step to bring down costs,” the White House said. Diesel is up about 77 percent this year, putting it on pace for the steepest yearly rise in American Automobile Association (AAA) records dating to 2000, CNN reported.

“President Trump’s war of choice on Iran is the sole cause of the diesel fuel price crisis,” Steve Hanke, a professor of applied economics at Johns Hopkins University, said in a statement to the Daily Caller News Foundation. “It doesn’t take rocket science to figure out that the only way to solve the crisis is to stop the war.”

“Increasing on-road fuel supplies by enabling access to dyed diesel volumes currently restricted to off-road use could reduce prices,” Kevin Book, managing director at ClearView Energy Partners, said told the DCNF in a statement.

But the order “does not necessarily eliminate the $0.244/gal in ‘back-up’ federal taxes that would be due,” Book said. It appears instead to defer the tax, suspend penalties for those who do not pay it and buy the White House and Treasury time to find a way to eliminate it, which he said “looks likely to require an act of Congress.”

“The EO [executive order] directs temporary penalty relief and potential tax deferral, not outright tax forgiveness,” American Trucking Associations Chief Advocacy and Public Affairs Officer Henry Hanscom said in a statement to the DCNF. “Carriers need clear federal and state guidance on eligibility, reporting, and any taxes that remain payable.”

“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,” Hanscom added.

The Treasury Department did not immediately respond to the DCNF’s request for comment.

The order leaves state fuel taxes and roadside inspections to governors. Ten states, including Texas, Oklahoma, North Carolina and Alabama, took steps to expand highway use of dyed diesel between Sept. 23 and Oct. 2, according to a ClearView tally cited by CNN. The count still stood at 10 as of Tuesday morning, with several other states appearing to consider similar steps, ClearView’s Book said.

California, Florida, Ohio, Pennsylvania and Georgia, the five biggest diesel-consuming states after Texas, accounted for approximately 41 percent of the nation’s diesel and other special fuel use in 2025, and none appear to have loosened their dyed diesel rules, Book told the DCNF.

“The typical trucker will save more than $100 every time they fill up,” Trump said as he signed the order, Fox 9 reported. The federal tax comes to about $60 on a 250-gallon fill, and savings top $100 only where states match the federal move, according to the White House.

Diesel averaged $6.32 a gallon nationwide Tuesday, down from a record $6.53 on Sept. 22, according to AAA figures cited by CNN.

“Every $1 increase per gallon in fuel costs our members around $400 more per week, and sustained high prices will put many truck drivers out of business,” Owner-Operator Independent Drivers Association President Todd Spencer said in a statement to the DCNF.

“OOIDA believes allowing the wider use of red-dyed diesel will provide minimal relief. Market stability is essential to bring down costs for the long haul,” Spencer added.

“The temporary highway use of red-dyed diesel will help with transportation and supply chain costs, like transporting machines to the field,” Republican Nebraska Sen. Pete Ricketts — who welcomed the order — said in a statement to the DCNF.

Ricketts is currently in a competitive November reelection race against Democratic-backed independent candidate Dan Osborn.

The American Fuel & Petrochemical Manufacturers, which represents refiners, said in a statement that wider access to tax-free dyed diesel “would provide some relief without causing other chaos in U.S. fuel production or raising costs of gasoline and jet fuel the way export restrictions would.”

The U.S. Department of Agriculture (USDA) “does anticipate that highway trucking for agriculture products will utilize dyed diesel,” a USDA spokesperson said in a statement to the DCNF.

“Thanks to President Trump’s leadership, diesel prices for our hardworking truckers are falling,” a U.S. Department or Transportation (USDOT) spokesperson said in a statement to the DCNF. “USDOT is doing its part to support this mission by working with our federal and state partners on tax-free usage of dyed diesel.”

Trump said during his Grand Island speech that the war in Iran will end “very soon” and “the oil will come tumbling down,” so the order would not be needed for long, FarmWeek reported.