Trump Administration Issues Relief Order For Diesel Fuel

In response to record prices for diesel fuel, the Trump Administration has issued an executive order (EO) that provides tax relief for diesel customers and also suspends penalties for using off-road diesel in OTR applications.

The order defers payment of federal diesel excise taxes from October 5 through December 31, 2026, with some reports claiming the administration is also exploring options to forgive the deferred taxes entirely. The order also suspends federal penalties for using dyed diesel on highways through the end of the year.

Multiple states have also enacted emergency fuel tax adjustments and fuel use waivers, and combined with federal diesel relief efforts could see substantially reduced prices for fill-ups. The Trump administration estimates roughly $60 less for a 250-gallon fill up, based on the deferred 24.4 cents/gallon federal tax, an amount that could swell to more than $100 less per 250 gallons in states where state taxes are also deferred.

Technically, the EO directs the Treasury to determine if the tax relief is authorized and if so to defer payment of diesel excise taxes in the time period specified, without penalties, interest or additions. The EO also directs Treasury to direct the IRS to announce it will not impose penalties when dyed diesel is sold for use or used on highways during the time period.

Other directives in the order are:

• Treasury must determine and publicly announce how the IRS will allocate fuel-tank inspection and sampling resources during the relief period. 

• The Federal Motor Carriers Safety Administration 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. 

Officials with the American Loggers Council and the Energy Marketers of America (EMA) have cautioned that deferral is not forgiveness, that the order is intended to provide relief while giving prices time to go down. A regulatory fact sheet from EMA notes that diesel users should wait for federal and state guidance and solid information from state logging associations and the ALC before changing their dyed-diesel sales, tax collection, recordkeeping and compliance practices.