Trump signs order opening tax-free dyed diesel to all drivers

President Donald Trump signed an executive order on Oct. 5, 2026, at a rally in Grand Island, Nebraska, temporarily allowing any driver to purchase tax-exempt red-dye diesel, a fuel normally restricted to farm and off-road vehicles. National diesel prices averaged $6.32 a gallon that day, according to AAA, up from $3.76 a gallon before the U.S. and Israel's war against Iran began.nbcnews.com+1

The order matters because diesel costs feed directly into the price of hauling freight, farming, and stocking shelves, and the waiver runs through the end of the year. It goes further than actions ten states had already taken, which largely shielded agricultural and timber haulers from penalties rather than opening dyed diesel to every driver on public highways.time.com

What the order directs

The order directs the secretaries of Transportation, Agriculture, Defense, and the Treasury to temporarily allow off-road dyed diesel for highway use and defer the applicable federal excise tax. It also encourages states to halt inspections and suspend state taxes for on-road use of dyed diesel, and states that purchase volume limits on red-dyed diesel sales will not be enforced.

Trump announced the order at a rally at the Pinnacle Bank Expo Center on the Nebraska State Fairgrounds, where he told the crowd he would "officially waive the off-road requirement and allow anyone to purchase tax-free, red-dye diesel." He also said the order would "drive down the costs of all goods, including groceries."

Dyed diesel is chemically the same as regular road diesel, but it carries a small amount of red dye so inspectors can tell it apart at the pump. It is exempt from the federal highway tax of 24.3 cents per gallon, plus state highway taxes, which averaged 35.5 cents per gallon as of January 2026, according to the U.S. Energy Information Administration.

How dyed diesel differs

Because the dye marks the fuel, using it on public roads without a waiver normally draws fines and penalties. The order defers the federal tax obligation while the administration seeks to eliminate those deferred taxes entirely, and the Treasury Department is instructed to review federal diesel taxes for further cost reductions.

The direct saving at the pump is limited because most gas stations and truck stops do not sell dyed diesel to ordinary consumers. Filling an 18-wheeler with 250 gallons costs about $1,580 at current prices, roughly $700 more than at the start of the year, when diesel averaged about $3.52 a gallon. Waiving federal taxes saves truckers about $60 per fill-up; if states also waive their taxes, the White House suggests savings could top $100 per fill-up.

Ten states — Alabama, Arkansas, Indiana, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma, and Texas — had already temporarily permitted some on-road use of dyed diesel, mostly by waiving fines for agricultural and timber haulers. North Dakota Gov. Kelly Armstrong said the measure provides "temporary relief and help our farmers and ranchers through the harvest season." North Dakota charges 23 cents a gallon in state taxes on regular diesel versus 4 cents on dyed diesel.

Where the savings land

The order arrives weeks before the Nov. 3 midterm elections, in a year when voters in both parties cite high gas prices and the rising cost of living as top issues. Trump campaigned for Republican Sen. Pete Ricketts, who faces a challenge from independent Dan Osborn, and for Pillen, who faces Democratic former Sen. Lynne Walz in the gubernatorial race.

The waiver lasts through the end of the year, and the Transportation Department will negotiate with states about temporarily waiving road-diesel taxes. Whether states follow the federal lead determines whether truckers see the larger $100-per-fill-up saving the White House projects, or only the roughly $60 from the federal deferral alone.