Trump Signs Executive Order Allowing Highway Use of Tax-Free Red-Dyed Diesel

WASHINGTON. DC. | In an effort to address rising fuel prices and global supply disruptions, President Donald Trump signed an executive order authorizing the temporary use of off-road red-dyed diesel fuel on public highways. The directive waives traditional off-road enforcement and instructs the Department of the Treasury to defer applicable federal excise taxes on dyed diesel through the end of the year without interest or penalties.

Red-dyed diesel, which is chemically similar to standard highway diesel, was previously restricted to agricultural, construction, and stationary equipment due to its tax-exempt status. Under standard federal tax law, on-road diesel incurs a 24.4-cent tax per gallon. By opening dyed diesel to all vehicles, the administration aims to deliver immediate cost relief to freight transporters, agriculture operations, and daily motorists.

The executive order directs the Department of Transportation, Department of Agriculture, and the White House Office of Intergovernmental Affairs to coordinate with state leaders and industry stakeholders. Federal agencies are actively encouraging state governments to mirror the federal tax deferral to maximize overall savings at the pump for commercial operators.