US Relaxes Restrictions on Highway Use of Tax-Exempt Dyed Diesel

en.Wedoany.com Reported - On October 5, US President Trump signed an executive order temporarily allowing dyed diesel—originally intended mainly for non-highway uses such as agricultural machinery and construction equipment and exempt from the federal highway fuel tax—to enter the highway transportation sector, while adjusting related federal excise tax collection arrangements.

The US Secretary of the Treasury will coordinate with the Secretary of Defense to defer the federal excise tax incurred from the use of the aforementioned diesel for highway transportation, with the deferral period lasting until December 31, 2026, during which no interest or penalties will be charged. The Treasury Department is also required to study feasible paths for canceling the ultimate obligation to pay the deferred taxes. The current US federal diesel excise tax is 24.4 cents per gallon.

The executive order requires the US Secretary of Transportation to coordinate with state governments, industry organizations, and labor organizations on arrangements for the supply and use of the relevant diesel; the Secretary of Agriculture is responsible for ensuring that farmers in high-demand areas have access to the relevant fuel and for promoting supporting measures by states. The White House Office of Intergovernmental Affairs will also push for more states to adjust their state-level fuel tax policies.

Whether state-level fuel taxes are adjusted in tandem is decided by each state separately. According to White House estimates, with corresponding measures taken by state governments, the reduction in federal and state taxes for a single 250-gallon refueling could exceed $100.