CENTRAL INDIANA BUSINESS

Trump order temporarily expands access to tax-free red-dyed diesel

According to CBS News MoneyWatch, on 2026-10-06 President Trump issued an executive order deferring the federal excise tax on red-dyed diesel for the remainder of 2026 and waiving the off-road-only requirement so anyone, including farmers, could buy tax-free red-dyed diesel.

BUSINESSINDY BRIEFBy BusinessIndy Editorial StaffCommentsPublished October 8, 2026 at 9:49 AM EDT

AI-generated illustration of the topic: Trump order temporarily expands access to tax-free red-dyed diesel — AI illustration · Not a photograph of the reported event.

According to CBS News MoneyWatch, on 2026-10-06 President Trump issued an executive order that defers the federal excise tax on red-dyed diesel for the remainder of 2026 and "officially waive[s] the off-road requirement," allowing broader purchases of tax-free red-dyed diesel, including by farmers for personal vehicles.

The White House said the order directs the Treasury secretary to explore eliminating the tax requirement and that it is working with states to encourage them to waive their bans on on‑road use; many states currently prohibit red‑dyed diesel on roads. A White House official told CBS News drivers would be liable for the deferred tax only if the IRS, at the direction of the Treasury secretary, takes enforcement action, and violators could face fines or tax-evasion penalties.

WHY IT MATTERS

This order changes who can legally buy tax-exempt red-dyed diesel, a fuel dyed red so law enforcement can spot off-road use. Red-dyed diesel is normally intended for off-road equipment and is exempt from the federal excise tax of 24.4 cents per gallon that applies to on-road diesel. By deferring that federal tax through 2026, the White House says drivers who rely on diesel "could save more than $100 each time they fill up," according to a White House fact sheet cited by CBS News MoneyWatch.

But savings are uncertain and limited by other factors the order does not change. Energy analyst Patrick De Haan told CBS News the policy would likely yield only minimal savings for farmers and estimated personal-vehicle savings of about "50 or 60 cents a gallon," and he warned that lower prices without more supply could stimulate demand and push prices higher. Experts in the article also noted the executive order does not address diesel supply; Gulf Oil adviser Tom Kloza said the U.S. has about 105 million barrels of diesel in inventory.

Practical next steps to watch: Treasury and the IRS for guidance on enforcement and tax liability, whether states lift bans on on‑road use, and any short-term changes in diesel demand or retail prices. The deferral in the order applies through 2026-12-31, per the White House statement reported by CBS News MoneyWatch.

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