Treasury faces Saturday deadline on Trump's dyed-diesel tax relief
The Treasury has until Saturday to decide whether it has legal power to delay federal tax on red-dyed diesel used on highways, under President Trump's Oct. 5 order. Truckers and farmers paying more than $6 a gallon want clear rules. The relief covers fuel used from Oct. 5 through Dec. 31 and delays the tax rather than erasing it.
President Trump's order on red-dyed diesel faces its first deadline this week. The Oct. 5 order gives the Treasury secretary five days to decide whether federal law allows the relief. That window ends Saturday, Oct. 10.
Dyed diesel is the same fuel as regular diesel. It is colored red because it is meant for farm tractors, construction gear and other off-road machines, and it skips the road tax. Using it on the highway is normally against the rules. That federal tax is 24.4 cents a gallon, GasBuddy analyst Patrick De Haan wrote.
The order tells Treasury to delay payment of that tax for fuel used from Oct. 5 through Dec. 31, if the law allows. It tells the IRS to waive penalties for using dyed diesel on highways in that period. It also asks Treasury to look for ways, including new laws, to cancel the delayed tax.
Diesel prices are why this matters. The national average recently hit $6.31 a gallon, and it topped $6.50 for the first time in September, Transport Topics reported.
When he signed it at a rally in Nebraska, Trump said he would "allow anyone to purchase tax-free red dye diesel for any reason." The order itself is narrower. It speaks of deferral and penalty relief.
Truckers want details. "The EO directs temporary penalty relief and potential tax deferral, not outright tax forgiveness," said Henry Hanscom of the American Trucking Associations. He said the fuel comes from the same limited supply, so the change "does not create additional fuel."
De Haan sees practical limits. Dyed diesel is mostly sold in rural areas, not at truck stops built for big rigs. And state rules differ. Nebraska, North Carolina, Texas and Indiana have eased their rules, and Illinois said it is relaxing enforcement. But a truck crossing into a stricter state could face tickets and tax bills.
"When you hear deferred, it's like, 'Am I going to have to pay it later?'" De Haan said.
The Transportation Department is told to keep safety checks going and work with states. The Agriculture Department is told to help farmers get enough dyed diesel.
What we know: Treasury must rule on its authority by Oct. 10.
What we don't: Whether delayed taxes will ever be forgiven, and what IRS guidance will say.
Where outlets agree The order text and Transport Topics both say Treasury has five days to decide if relief is legal, covering dyed diesel used Oct. 5 through Dec. 31.
Where they differ Trump called it tax-free fuel for anyone, but the order and the trucking industry describe a delay with penalty relief, not forgiveness.