10/07/2026
Did you hear that President Trump said I can used Dyed Diesel in my truck? Yes, we did hear the announcement and we do understand that all of our on-road diesel customers want to save money!! We do too! The problem, like most announcements like this, is in the details. Each year Affordable joins the Pennsylvania Petroleum Association for situations just like this one. They give us guidance and instructions that are clear, easy to follow, and are accurate according to the actual laws. Affordable Fuels is committed to watching this developing news closely, and keeping our customer informed! Please see their guidance below -
Executive Order: Emergency Tax Relief on Diesel Fuel
Last night, President Trump issued an Executive Order temporarily allowing dyed diesel fuel to be used in on-highway vehicles and providing for the temporary deferral of certain federal diesel fuel taxes through December 31, 2026. An additional Fact Sheet was released with the Executive Order. The action requires the Treasury’s §7508A determination and the IRS penalty announcement within 5 days (October 10).
The federal action does not, by itself, waive Pennsylvania fuel taxes. PPA members should not assume that dyed diesel can be sold or used for on-highway purposes without state tax obligations of $0.741 per gallon for 2026. The PPA recommends, at minimum, that members wait for further Treasury, IRS, and state guidance before deciding on dyed diesel sales for on-road applications.
PPA is seeking guidance from the state regarding applicable state taxes, collection and reporting procedures, biodiesel blending requirements, vehicle manufacturer warranty liability, responsibilities throughout the distribution chain, and documentation or recordkeeping requirements. PPA will provide additional information as soon as guidance becomes available. Energy Marketers of America (EMA) released the following overview
EMA Regulatory Alert
President Trump Directs Diesel Tax Relief; Federal and State Implementation Remains Unclear
What the Order Directs
Conditional tax deferral (§ 2(a)–(b)). Within five days (October 10, 2026), Treasury, in consultation with the Secretary of War as appropriate, must determine whether relief is authorized under Internal Revenue Code § 7508A, which authorizes Treasury/IRS to postpone certain federal tax deadlines for up to one year. This determination includes whether a qualifying event has occurred and which taxpayers are affected. If Treasury makes those determinations, it is to defer payment of diesel fuel excise taxes imposed by § 4041(a)(1)(A) or § 4041(b)(1)(B) and incurred from October 5 through December 31, 2026, for the covered taxpayers only. To the extent the law allows, the deferral will be without penalties, interest, additional amounts, or additions to tax.
Penalty relief (§ 2(c)). Additionally, within five days (October 10, 2026), Treasury must direct the IRS to announce that it will not impose penalties under § 6715(a)(1) or (a)(2) when dyed diesel is sold for use or used on the highway during that period. The announcement must also address penalties for failure to make semimonthly deposits.
Implementing guidance (§ 3). Treasury must issue guidance identifying:
• the specific relief and any conditions on it;
• its legal basis;
• the covered taxpayers, persons, locations, acts and liabilities;
• the applicable periods; and
• the date by which postponed taxes must be paid.
Other agencies (§§ 5–8). The other directives in the Executive Order are:
• Treasury must determine and publicly announce how the IRS will allocate fuel-tank inspection and sampling resources during the relief period.
• FMCSA must coordinate with states, industry and labor organizations while continuing all compliance enforcement, including audits, inspections and monitoring.
• USDA and the White House Office of Intergovernmental Affairs are to promote dyed diesel access for farmers and encourage corresponding state action.
Key Issues for EMA/PPA Members
Deferral is not forgiveness. Section 4 of the Executive Order directs Treasury only to explore ways, including legislation, to eliminate the deferred liability. It does not eliminate it. The § 4041(a)(1)(A) tax applies to sales of diesel for use in highway vehicles, so marketers could be among the taxpayers liable for 24.4 cents per gallon when the deferral ends. Pending guidance on covered taxpayers and payment dates, marketers should consider documenting any such sales and customer use.
Federal penalty relief does not resolve EPA or state restrictions. The § 6715 announcement addresses only federal excise tax penalties, and the Order must be implemented consistent with applicable law (§ 9(b)). EPA’s fuel regulations generally prohibit visible red dye in highway diesel unless EPA grants a waiver. This Order does not direct EPA to act, and no waiver had been issued as of this writing. Dyed fuel used on the road must still meet the 15 ppm ULSD standard. High-sulfur heating oil and locomotive or marine fuel may not be used in highway vehicles.
State fuel taxes, licensing and reporting requirements, and dyed-fuel prohibitions also continue to apply unless a state acts. States, including Alabama, Arkansas, Indiana, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma and Texas, have issued emergency relief. These state orders vary, and many are limited to agricultural vehicles, state highways, or short time periods.
Supply impacts. Added demand during harvest and the start of heating season could strain dyed diesel and heating fuel supplies.
A separate program. The IRS has also issued temporary regulations implementing the separate § 6435 refund mechanism for tax-paid fuel later removed from a terminal as dyed fuel for nontaxable use. That program is distinct from the relief under this Order.
