10/07/2026
📍ATA Update: Dyed Diesel Fuel
Please see the latest guidance below from the American Trucking Associations (ATA) regarding President Trump's recent Executive Order related to dyed diesel fuel.
I want to provide a brief update on the President's dyed diesel Executive Order and how ATA is advising carriers to approach this new policy.
📣1. What was announced
On October 5, President Donald J. Trump signed an executive order directing temporary federal tax-payment and penalty relief for highway use of dyed diesel. Dyed diesel is normally reserved for off-road uses and marked red to distinguish it from fuel subject to highway taxes.
The order directs Treasury and IRS to:
📍Determine eligibility for tax deferral. Within five days, Treasury must determine whether statutory authority permits relief and which taxpayers qualify. If those determinations are made, eligible tax obligations incurred from October 5 through December 31, 2026, would be deferred without interest or penalties, to the extent authorized by law.
📍Announce dyed-diesel penalty relief. Within five days, Treasury must direct IRS to announce that specified penalties will not apply to dyed diesel sold for highway use or used on highways during that period. The announcement must also address penalties for missed semimonthly tax deposits.
Publish implementing guidance. That guidance must identify covered taxpayers, conditions, applicable deadlines and the date postponed taxes must ultimately be paid.
Explore tax forgiveness. Treasury must examine ways, including legislation, to eliminate the deferred tax obligations. The order itself does not forgive those taxes.
📍The order also directs federal coordination on fuel access, protection of agricultural distribution and encouragement of corresponding state action. It explicitly directs FMCSA to continue legally required compliance enforcement.
🚨Bottom line: This is a directive for temporary penalty relief and potential tax deferral, not a blanket repeal of diesel taxes or all fuel-related requirements. We recommend that carriers delay the use of dyed diesel for on-road use until Treasury has issued its guidance. 🚨
📣2. Practical implications for trucking
Potential relief is not the same as permanent savings
📍Federal statute identifies the federal diesel tax as 24.4 cents per gallon, approximately $60 on a 250-gallon fill. Its claim of savings exceeding $100 per fill assumes corresponding state action. Those figures should not be presented as guaranteed savings for every carrier, particularly because federal tax forgiveness remains unresolved.
📍Dyed diesel does not create additional fuel supply
📍Dyed and clear diesel come from the same underlying supply. Allowing highway use changes the fuel’s tax and enforcement treatment; it does not address the global supply constraints driving prices higher.
📍Access through normal fueling networks remains a practical hurdle
There are significant distribution challenges: most truck stops and major fleet fueling locations dispense clear diesel, while switching involves storage, delivery controls, labeling and recordkeeping. The executive order directs coordination on access but does not establish that dyed diesel is available throughout carriers’ usual fueling networks.
📍State taxes and interstate reporting require separate clarification
📍State tax liability and International Fuel Tax Agreement (IFTA) reporting are significant concerns for interstate carriers. Those issues should be checked against new federal guidance and each relevant state’s written instructions rather than treated as resolved by the announcement. Some states have suspended enforcement of dyed diesel but have different requirements.
📍Interstate trucks could expose themselves to penalties if they use dyed diesel and enter a state that hasn’t issued a waiver.
Highway funding remains an important consideration
📍Fuel-tax holidays provide uncertain pump-price savings and put highway funding at risk, and there’s a distinction between delayed collection and actual forgiveness: if taxes are forgiven, highway use goes untaxed while trucks continue relying on roads and bridges.
Recommended guidance for members
🚨Do not change fueling practices solely on the basis of the announcement.
🚨Delay use of dyed diesel for on-road use until Treasury has issued its guidance.
🚨Confirm eligibility, supplier participation, state requirements, and reporting treatment. Retain complete fuel-purchase and mileage records.
🚨Do not assume deferred taxes have been eliminated or change fuel-surcharge arrangements based on advertised savings alone.
🚨Be aware that the use of dyed diesel can stain fuel systems, leaving residual evidence of dyed diesel that could be subject to enforcement measures after federal and state enforcement relief has expired.
🚨Before using dyed diesel, check with your equipment supplier to ensure that there are no warranty implications.
