Trump Defers Federal Fuel Tax on Dyed Diesel

President Trump signed an executive order late on Monday temporarily opening highway use of tax-free red-dyed diesel, deferring the federal diesel tax on that fuel through the end of the year with no interest or penalties, according to OilPrice.

The federal diesel tax stands at $0.244 per gallon, which amounts to roughly $60 on a 250-gallon fill. According to the White House release cited by OilPrice, where states match the federal action, savings are expected to top $100 per fill.

Market Context and Pricing

Red-dyed diesel, also called off-road diesel, is traditionally used in agriculture and construction and is not subject to the federal excise duty. President Trump stated at a rally in Nebraska that the order will allow anyone to purchase tax-free red-dyed diesel for any reason to help drive down the costs of goods and groceries.

Diesel prices have remained elevated due to tightened supply following war-related refinery outages in the Middle East and Russian refinery damage from Ukrainian drone attacks. AAA figures cited in the report show the price of diesel stood at $6.3207 per gallon as of October 5, following a peak of $6.53 per gallon in late September.

Key facts

• President Trump signed an executive order late Monday deferring the federal diesel tax on red-dyed diesel through the end of the year.
• The federal diesel tax rate is $0.244 per gallon, representing about $60 on a 250-gallon fill.
• Red-dyed diesel is normally reserved for industries like agriculture and construction and is exempt from the federal excise duty.
• AAA reported the price of diesel at $6.3207 per gallon as of October 5, down slightly from an all-time high of $6.53 in late September.