Everybody's asking the same thing at the pump and on location. Can I run red diesel in my truck or not.
As of Oct 17, the federal penalty is off through Dec 31. State rules depend on where you're standing, and the federal tax bill hasn't gone away.
What The Feds Did
- Oct 5: Executive Order 14435 told the Treasury to drop the federal penalty on red diesel used on the highway and defer the federal tax where the law allows.
- Oct 14: The IRS made it official. No federal penalty for selling or burning dyed diesel on highways nationwide, retroactive to Oct 1 and good through Dec 31.
- The IRS says all of its Fuel Compliance Officers are being reassigned, and no federal on-road dye inspections will happen through Dec 31.
The Board
- DIESEL (AAA daily national average, Oct 17)...6.328
- DIESEL (EIA weekly on-highway, week of Oct 12)...6.179
- AAA DIESEL RECORD (Sept 22)...6.528
- WTI (Oct 16 settle)...101.41
- BRENT (Oct 16 settle)...109.86
The Catch
Nobody has forgiven the 24.4 cent federal diesel tax. Guidance on postponing it is still coming, and the IRS says it will "explore avenues to eliminate" what's deferred. A deferral only pushes the bill back, so plan on owing it unless it gets cancelled.
Per the IRS, the one who owes it is generally the seller at a retail pump, or "the operator of the motor vehicle" when red comes out of a bulk tank.
The IRS also says this relief has no effect on state fuel taxes and penalties.
Where Your State Stands
- NORTH DAKOTA...Gov. Armstrong's order covers licensed vehicles used for ag work, hauling ag loads included, through Nov 30. The Highway Patrol says it doesn't follow you past the state line. Outside ag, red in a licensed vehicle still draws a state fee of $500 for a first violation, up to $10,000 for a fourth, per state law.
- MONTANA...Executive Order 11-2026 suspends enforcement only for commercial vehicles, generally 10,001 lbs and up, doing ag and timber work, through Nov 23.
- TEXAS...Gov. Abbott says farmers and truckers can now use dyed diesel on Texas roads. The Comptroller says the 20 cent state tax is still owed. The Sept 28 proclamation runs 30 days unless renewed, so around Oct 28.
- NEW MEXICO...No state relief announced as of Oct 17. Lea and Eddy County hands, state rules still apply there.
- EVERYWHERE ELSE...Transport Topics listed 19 states with some form of relief on Oct 16, and Michigan, Oklahoma and Virginia have some too. Check yours before you fill up.
The Math
Federal tax on a 30 gallon pickup fill runs about $7.30. On a 250 gallon semi fill it's about $61. Red doesn't have it built into the price, and you only keep that money if the tax never comes due.
North Dakota taxes red at 4 cents a gallon vs 23 on clear, so a 250 gallon fill in an ND ag truck runs about $108 less up front.
Truckers
The bigger problem is finding it. GasBuddy's Patrick De Haan says "most major truck stops don't sell dyed diesel."
IFTA executive director Carmen Martorana told Land Line on Oct 6 that carriers "will have to pay the state taxes on the IFTA return." That holds anywhere the state hasn't waived its own tax.
On engines, Land Line's Tom Berg says there's no chemical difference between red and clear, low sulfur included, and it won't harm aftertreatment.
The Tank On Location
Your outfit's fuel policy still decides who fills from the red tank on location. The IRS stepping back doesn't change that.
Where It Goes From Here
Next to watch is the IRS guidance on the deferred tax. Cancelling it outright could take Congress, and the order itself names legislation as an option.
Who's Hiring
The current board is the one to check.
Field Report
Drop your basin and your state. Tell us what diesel costs at your pump today, whether you'd put red in anything with plates, and whether you've seen anybody get checked for dye since Oct 1.