Trump Signs Executive Order Allowing Tax-Exempt Dyed Diesel on U.S. Highways

WASHINGTON -- President Donald Trump signed an executive order Monday night to allow the tax-exempt variety of diesel fuel normally reserved for farm equipment and construction machinery to be used on public highways, deferring the federal excise tax on that fuel through the end of the year.

Trump unveiled the order at a campaign event in Grand Island, Nebraska. According to a White House fact sheet reviewed by reporters, the order temporarily permits off-road "dyed" diesel for highway use and defers the applicable federal excise tax without interest or penalties.

The federal diesel tax stands at 24.4 cents per gallon. The White House said that where states match the federal action, combined savings could top $100 per fill on a 250-gallon tank.

The order instructs the Treasury secretary to defer the federal road-use tax on dyed diesel through year-end and to explore ways to eliminate the underlying tax obligation, potentially through legislation. CNN reported that the tax obligations are deferred, not forgiven, with officials directed to seek pathways to relieve them.

The Transportation secretary was directed to coordinate with states, industry, and labor groups on dyed-diesel access. The Agriculture secretary was instructed to ensure farmers' access in high-demand areas. The White House Office of Intergovernmental Affairs was told to press more states to adopt matching policies.

Diesel prices have risen sharply in recent months. According to AAA data cited by CNN, the national average price for diesel hit a record $6.53 a gallon on September 22 before easing to $6.32 a gallon on Tuesday.

Analysts who spoke to ABC News downplayed the potential impact of the order, saying savings would be modest, particularly for farmers who already use dyed diesel for their agricultural equipment and thus would see little change in their fuel costs.

The order arrived weeks before November's midterm elections. Bloomberg reported that the signing was part of a month-long effort by Trump to rally Republican voters ahead of the vote.

At least 10 states, including Texas, Oklahoma, North Carolina, and Alabama, had already taken steps before the federal action to expand dyed-diesel access for highway vehicles, according to CNN. Louisiana Gov. Jeff Landry had declared a state of emergency to allow farmers to use dyed diesel already on hand. Nebraska Gov. Jim Pillen said he had signed a state executive order weeks earlier and called the federal action an expansion of that work.

The American Soybean Association Vice President Dave Walton said in a statement released by the White House that the order "seeks to address high fuel costs impacting our bottom lines" as farmers move the 2026 harvest to market.

The White House attributed elevated diesel prices to the Russia-Ukraine war and constrained global refining capacity. Separately, CNN noted that diesel also faces average state taxes of 35.5 cents per gallon on top of the federal levy, which the executive order does not touch.

The order does not set a price cap, does not compel any retailer to lower prices, and does not add to domestic refining capacity. Its near-term impact depends on state uptake and whether suppliers pass the deferred tax savings to consumers at the pump.

Sources cited:
- White House Fact Sheet, Diesel Affordability (https://www.whitehouse.gov/fact-sheets/2026/10/fact-sheet-president-donald-j-trump-promotes-diesel-affordability/)
- CNN, Trump signs executive order aimed at lowering diesel prices (https://www.cnn.com/2026/10/05/business/trump-diesel-prices-executive-order)
- ABC News, Will Trump's executive order on dyed diesel lower prices? (https://abcnews.com/Business/trumps-executive-order-dyed-diesel-lower-prices-experts/story?id=137032411)
- Bloomberg, Trump Signs Order to Ease Limits on Diesel Variety to Curb Costs (https://www.bloomberg.com/news/articles/2026-10-06/trump-signs-order-to-ease-limits-on-diesel-variety-to-curb-costs)
- NBC News, Trump opens tax-exempt red dye diesel to all drivers (https://www.nbcnews.com/business/energy/aiming-fuel-costs-trump-opens-tax-exempt-red-dye-diesel-rcna601748)
- White House, What They Are Saying: Diesel Relief (https://www.whitehouse.gov/releases/2026/10/what-they-are-saying-president-trump-delivers-immediate-diesel-relief-saving-americans-up-to-100-per-fill/)