Trump Defers Federal Tax on Highway Use of Dyed Diesel

President Donald Trump signed an executive order at a rally in Grand Island, Nebraska, on October 5, temporarily allowing red-dyed diesel typically reserved for off-road use to be used on highways and deferring federal excise-tax payments on that fuel through the end of 2026. The deferral carries no interest or penalties, according to the White House, which said officials would also examine ways to eliminate the deferred tax obligation. The order aims to widen access to a fuel commonly used in farm equipment and construction machinery as diesel prices remain high. Dyed diesel is similar to ordinary diesel, but its red coloring allows authorities to distinguish fuel generally exempt from highway taxes from fuel intended for road use. Under normal rules, using the dyed fuel on highways can trigger taxes and penalties. The federal excise tax is 24.4 cents per gallon, according to the White House. It estimated that deferring the federal charge would save about $60 on a 250-gallon fill. The administration said savings could exceed $100 per fill in states that take corresponding action, but that larger estimate depends on state-level changes.