Trump signs order to permit tax-exempt red diesel for broader use amid rising fuel prices
An executive order allows the temporary use of red-dyed diesel, normally exempt from highway taxes, for trucks and farms through the end of 2026 as diesel prices exceed $6 per gallon.
President Donald Trump signed an executive order on Monday that temporarily permits truck drivers and farmers to use red-dyed diesel, a fuel normally reserved for off-road equipment and exempt from the 24.4-cent-per-gallon highway diesel tax. The order defers collection of the federal excise tax on highway diesel through the end of 2026 and directs the Treasury to consider eliminating the deferred tax liability.
The measure comes as the U.S. national average diesel price rose above $6 per gallon in September, the first time the level has been reached, driven by supply disruptions linked to conflicts in Ukraine and Iran. Industry estimates indicate Americans are spending roughly $700 million more each day on gasoline and diesel compared with a year earlier.
"Truckers could save more than $100 per fill-up," the White House said.
Several states have already eased restrictions on the tax-exempt fuel to alleviate the impact of higher prices. The administration cited tight global supply and limited refining capacity as key factors behind the price increase, and noted that the Group of Seven agreed to release 100 million barrels of diesel and crude reserves following pressure from the president.