On October 5, 2026, President Donald Trump signed an executive order aimed at reducing diesel fuel costs for truckers, farmers, and other industries that rely heavily on diesel-powered equipment. The order temporarily permits the use of red-dyed diesel fuel on public highways and directs the U.S. Treasury Department to defer certain federal diesel fuel tax payment obligations through December 31, 2026.
Under the Executive Order, Treasury Secretary Scott Bessent is directed to defer certain diesel fuel tax payments and provide relief from associated penalties to the extent permitted by law. Red-dyed diesel, which is typically reserved for off-road uses such as construction and agricultural equipment, is generally exempt from federal highway fuel taxes and prohibited from use in vehicles traveling on public roads.
Importantly, the executive order does not eliminate or waive the underlying federal diesel fuel tax. Instead, it provides for the temporary deferral of certain payment obligations. Only Congress has the authority to eliminate a federal tax.
While the order could provide temporary financial and operational relief for industries facing elevated fuel costs, significant implementation questions remain. Additional federal guidance has not yet been issued regarding tax payment requirements, reporting obligations, penalties, interest, and other compliance considerations.
Contractors and other affected businesses are encouraged to exercise caution and await further federal guidance before making changes to their fuel purchasing or tax compliance practices. Additional information will be shared as federal agencies clarify the requirements and implementation of the executive order.
Additional Information: