President Trump Signs Executive Order Aimed at Lowering Diesel Prices
WASHINGTON — President Donald Trump signed an executive order Monday that temporarily allows dyed, off-road diesel on the highway and defers the federal excise tax on that fuel through Dec. 31, a step the White House says is meant to cut costs for farmers, truckers, and other diesel users.
The order, titled “Emergency Tax Relief on Diesel Fuel,” directs the Treasury secretary, in consultation with the secretary of war, to determine within five days whether relief is authorized under federal tax law. If so, the order would defer payment of the excise taxes imposed on diesel used on the highway from Oct. 5 through Dec. 31, without penalties or interest. The order also tells the Internal Revenue Service to announce it will not impose the usual penalties for selling or using dyed diesel on the highway during that period.
Dyed diesel is the red-colored fuel sold for off-road uses such as farming, construction and heating. It is not subject to the federal highway excise tax. Clear, on-road diesel is. Federal law has long barred dyed fuel from highway use so inspectors can spot tax evasion. The administration said governors and federal agencies can use enforcement discretion to pause those inspections and the related tax liability while the order is in effect.
The White House fact sheet issued with the order said the change would put money back in the pockets of farmers, truckers and workers, and cited savings of more than $100 on a truck refill. The federal excise tax on highway diesel is 24.4 cents a gallon. State diesel taxes are separate, and the order directs the White House Office of Intergovernmental Affairs to urge states to take matching steps. The Transportation Department is to work with states, industry, and labor on access to the fuel. The Agriculture Department is to focus on farmers in high-demand areas.
The administration tied the order to tight global diesel supply, pointing to the Russia-Ukraine war and limited refining capacity. It also said Trump had negotiated a European release of 100 million barrels of refined diesel from strategic reserves over the next four months, intended to add supply.
The tax relief is a deferral, not an automatic cancellation. The fact sheet says Treasury is to explore ways to eliminate the obligation to pay the deferred taxes. The order covers fuel taxes incurred through the end of 2026.
For North State agriculture and freight, diesel is a direct operating cost. Ranchers and row-crop growers in Shasta, Tehama, Siskiyou and Trinity counties use off-road fuel in equipment, while truckers moving hay, cattle, lumber and retail goods pay the on-road price at the pump. Whether the federal deferral shows up in local pump prices will depend on how quickly suppliers, the IRS, and state tax agencies put the order into practice, and on whether California matches the federal step.
To view the full text of the Executive Order, go to:
