Trump Signs Order to Waive Federal Diesel Tax, Allowing 'Red Dye' Fuel on Highways

Key points

• The executive order defers the federal diesel tax of 24.4 cents per gallon on tax-exempt 'red dye' diesel through the end of 2026.
• Diesel prices in the U.S. rose more than 70% since the Iran war began in February 2026, peaking at $6.52 per gallon in September.
• Trump directed the secretaries of transportation, agriculture, defense, and the Treasury to expand access to tax-exempt diesel and encourage states to suspend their own diesel taxes.
• The order was announced at a rally in Nebraska, a key midterm battleground where high fuel costs are a top voter concern.
• Transportation Secretary Sean Duffy previously announced a 90-day easing of rules for fuel truck drivers to help slow rising prices.

Background

Diesel prices have surged due to the Iran war and Ukraine’s drone strikes on Russian refineries, which led Russia to ban diesel exports. In September, Trump urged Ukraine to halt refinery strikes to ease global shortages. Several states, including Alabama and Louisiana, had already suspended penalties for using dyed diesel on highways to help agricultural sectors during harvest.

How outlets are covering it

NBC News frames the order as a political move to address voter frustration over high gas prices ahead of midterms, noting Trump admitted he did not understand what 'red dye' diesel was. The White House emphasizes the economic relief for truckers and farmers, highlighting potential savings of over $100 per fill when state taxes are also suspended. Both sources agree the move is driven by geopolitical disruptions, but NBC highlights the political timing, while the White House focuses on the affordability agenda.

Why it matters

The order could significantly reduce fuel costs for commercial drivers and potentially lower prices for goods, but it may also reduce federal revenue and raise questions about the long-term impact on fuel markets. It reflects the administration’s focus on addressing cost-of-living concerns ahead of the 2026 midterm elections.

What to watch

The administration will work with states to suspend diesel taxes, and the impact on fuel prices and federal revenue will be monitored through the end of 2026. The order’s effectiveness in lowering costs for consumers and businesses will be a key metric for the administration.