US President Donald Trump has ordered a temporary expansion of tax-exempt red-dyed diesel access through the end of 2026, directing federal agencies to defer excise tax collection and support fuel supplies amid surging diesel prices.
The US President Donald Trump signed an executive order on 5 October 2026 to expand access to tax-exempt diesel fuel. The announcement came during a campaign rally in Grand Island, Nebraska, where Trump unveiled the directive from the stage.
The order eliminates off-road use restrictions for red dye diesel, allowing purchasers across all sectors to buy the fuel without federal excise taxes. Trump stated that the government hoped the temporary waiver would not remain necessary beyond the current year.
This follows after the Trump administration recently said that it is considering regulatory changes to reduce fuel prices, including expanding the use of red-dyed diesel to allow more buyers to avoid the federal fuel tax.
Economic pressure ahead of midterm elections
Diesel prices reached approximately USD 6.50 per gallon in September, creating political risk for the Republican Party as November’s midterm elections approach. Rising fuel costs have compounded Americans’ concerns about the overall cost of living.
The price surge stems from geopolitical tensions. The ongoing US-Israeli conflict with Iran and Russia’s invasion of Ukraine have triggered refinery attacks in the Middle East and Russia, restricting supply.
Implementation and coordination
The Treasury Department must defer federal excise tax collection on on-road dyed diesel through the remainder of 2026, with no interest or penalties applied. The department has been directed to explore permanent elimination of these tax obligations.
The Agriculture Department received instructions to secure farmer access to dyed diesel in areas facing supply shortages. The Transportation Department must coordinate with state governments, industry representatives, and labour organisations to manage fuel distribution.
