FROM OUR FEDERAL CONTACTS AT THE AMERICAN TRUCKING ASSOCIATIONS (ATA):
The American Trucking Associations has provided the following update regarding the President’s recent Executive Order on dyed diesel and how motor carriers should approach the new policy.
IMPORTANT: ATA recommends that carriers delay the use of dyed diesel for on-road use until the U.S. Department of the Treasury issues additional guidance.
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 the IRS to:
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Determine eligibility for tax deferral. Within five days, Treasury must determine whether statutory authority permits relief and which taxpayers qualify. If authorized, eligible tax obligations incurred from October 5 through December 31, 2026, would be deferred without interest or penalties.
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Announce dyed-diesel penalty relief. Treasury must direct the IRS to announce that specified penalties will not apply to dyed diesel sold for highway use or used on highways during the applicable period. The announcement must also address penalties for missed semimonthly tax deposits.
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Publish implementing guidance. Guidance must identify covered taxpayers, conditions, applicable deadlines and when postponed taxes must ultimately be paid.
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Explore tax forgiveness. Treasury must examine options, including legislation, to eliminate deferred tax obligations. The Executive 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. ATA recommends that carriers delay the use of dyed diesel for on-road use until Treasury issues its guidance.
Practical Implications for Trucking
Potential relief is not the same as permanent savings.
Federal diesel tax is 24.4 cents per gallon, or approximately $60 on a 250-gallon fill. Claims of savings exceeding $100 per fill assume corresponding state action. Those savings should not be considered guaranteed, 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, but it does not address the broader supply constraints driving prices higher.
Access through normal fueling networks remains a practical hurdle.
Most truck stops and major fleet fueling locations dispense clear diesel. Switching involves storage, delivery controls, labeling and recordkeeping. The Executive Order directs coordination on access but does not establish that dyed diesel will be readily available through carriers' normal fueling networks.
State taxes and interstate reporting require separate clarification.
State tax liability and International Fuel Tax Agreement (IFTA) reporting remain significant concerns for interstate carriers. Requirements should be checked against new federal guidance and each state's written instructions. Some states have suspended enforcement of dyed diesel restrictions but have different requirements.
Interstate carriers should exercise particular caution. Trucks using dyed diesel could face penalties when entering a state that has not issued corresponding enforcement relief.
Highway funding remains an important consideration.
There is an important distinction between delayed tax collection and actual tax forgiveness. Fuel taxes also remain a significant source of funding for roads and bridges used by the trucking industry.
ATA's Recommended Guidance for Motor Carriers
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Do not change fueling practices solely based on the Executive Order announcement.
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Delay the use of dyed diesel for on-road use until Treasury issues its guidance.
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Confirm eligibility, supplier participation, state requirements and reporting treatment before making changes.
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Retain complete fuel-purchase and mileage records.
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Do not assume deferred taxes have been eliminated or change fuel-surcharge arrangements based on advertised savings alone.
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Be aware that dyed diesel can stain fuel systems, leaving residual evidence that could potentially be subject to enforcement after federal or state relief expires.
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Before using dyed diesel, check with equipment suppliers regarding any potential warranty implications.
LMTA will continue to share additional information with members as federal and state guidance becomes available.
