Trump order lets truckers burn tax-free red diesel on highways
President Trump signed an executive order Monday allowing drivers to use cheaper red-dyed farm diesel on highways while deferring the 24.4-cent federal tax on it through the end of the year. Diesel prices reached a record $6.52 a gallon in September after the Iran war began. Trump promises savings above $100 per fill-up, though White House figures show about $60 in federal savings.
Truckers can now legally fill up with red diesel on the highway, at least temporarily. President Donald Trump signed an executive order Monday night at a rally in Grand Island, Nebraska, that temporarily lets off-road dyed diesel be used on public roads.
Diesel is taxed according to how it is used: fuel for highway trucks carries federal and state taxes, while fuel for farm equipment and construction machinery is tax-free and dyed red so inspectors can identify it, NBC News explained.
The order does not eliminate the tax. Instead, it postpones payment of the 24.4-cent-a-gallon federal tax on dyed diesel used on highways from Oct. 5 through Dec. 31, with no interest or penalties, Nebraska Public Media reported. The IRS is told not to penalize anyone for selling or using it on roads. The Treasury has five days to confirm federal law allows the relief, and it is asked to find ways to forgive the deferred bill.
"The typical trucker will save over $100 every time they fill up," Trump said. The White House's own figures put federal savings at about $60 on a 250-gallon fill. It says savings top $100 only where states also act, Nebraska Public Media reported. The order urges states to follow but does not change state taxes.
The price pressure is real. Diesel hit a record $6.52 a gallon on Sept. 22, according to AAA data cited by NBC. Since the Iran war began Feb. 28, diesel has climbed more than 70%. That is far more than the roughly 45% jump in Brent crude and 50% in gasoline. Prices have eased slightly since the peak. Ukraine's drone strikes on Russian refineries led Moscow to ban diesel exports through at least the end of this month, NBC reported.
In Nebraska, Gov. Jim Pillen said diesel averaged a record $6.21 a gallon in the state last month. He had asked Trump to pause diesel exports for 90 days. Monday's order does not address exports.
Fox Business noted that the order also tells the Agriculture Department to make sure farmers can still get dyed diesel in high-demand areas. The White House has also pointed to a deal for Europe to release 100 million barrels of refined diesel over four months, and a Transportation Department waiver that lets fuel-truck drivers work longer hours.
The order came at a midterm rally for Sen. Pete Ricketts, who faces independent Dan Osborn.
What we know: Federal tax on highway use of dyed diesel is deferred through Dec. 31.
What we don't: Whether states will match it, and whether the deferred tax is ever forgiven.
Where outlets agree NBC News and Fox Business both report that the order lets off-road dyed diesel be used on highways and that the administration estimates truckers will save more than $100 per refill.
Where they differ Trump calls the fuel tax-free, but Fox Business and Nebraska Public Media note the order only defers the federal tax, and the White House's own figures show about $60 in federal savings per 250-gallon fill.