Trump signed an executive order on tax benefits for dyed diesel for farmers

US President Donald Trump has signed an executive order enabling American farmers and truckers to use dyed diesel without the risk of facing a federal penalty. Dyed diesel is a tax-free fuel for off-road machinery used in agriculture, construction, manufacturing, and on trains. To distinguish it from standard road fuel, the dye Solvent Red 164 is added to it.

Under federal law, using or storing such fuel for purposes not exempt from taxes is punishable by a fine starting at $1,000 or $10 per gallon. However, under the new directive, the Internal Revenue Service will suspend the enforcement of penalties for the on-road use of dyed diesel until December 31, 2026. The White House has instructed Treasury Secretary Scott Bessent to defer the payment of certain diesel fuel taxes and ensure the waiver of penalties.

The White House administration explained that the agricultural sector has been heavily impacted by constrained global diesel supplies and rising prices amid military actions between Russia and Ukraine, as well as the conflict in Iran and issues in the Strait of Hormuz. The White House estimated that truck drivers will be able to save approximately $100 per fill-up.

Secretary of Agriculture Brooke Rollins and Secretary of Transportation Sean Duffy will handle the implementation of this policy: Duffy will work with states and organizations to streamline access to fuel, while Rollins will ensure supplies for farmers in high-demand regions.

The initiative was supported by specialized associations. American Farm Bureau Federation President Zippy Duvall noted that the road diesel tax is over 24 cents per gallon, so the ability to use tax-free fuel will help deliver the harvest to the market. American Soybean Association President Dave Walton also praised the administration's focus on agricultural affordability. Additionally, the governors of Tennessee (Bill Lee), Mississippi (Tate Reeves), and Iowa (Kim Reynolds) announced the suspension of their own state penalties for the on-road use of dyed diesel.