Dyed Diesel on Highways: What the October 2026 Executive Order Means for Fuel Buyers
What Executive Order 14435 and IRS IR-2026-122 actually do, what guidance is still missing, which states have matched it, and what to do with your fuel.
As of October 16, 2026, the IRS won't impose federal dyed-fuel penalties for highway use from October 1 through December 31, 2026. The federal tax isn't forgiven: the executive order defers it, and the IRS hasn't yet said who pays or when. State taxes and penalties still apply unless your state has acted.
Not tax or legal advice. This is a summary of public government documents, not legal or tax advice. FuelGo is a fuel supplier, not a law firm or tax advisor. Federal and state guidance is still changing; check with an attorney or tax advisor before you act on it.
The orderWhat the dyed diesel executive order says
Executive Order 14435, "Emergency Tax Relief on Diesel Fuel," was signed on October 5, 2026 and published in the Federal Register on October 9 (91 FR 64747). It directs Treasury to defer the federal excise tax, without penalties, on highway use of dyed diesel through December 31, 2026, to the extent the law allows. It's a deferral, not a repeal, and state rules still apply.
The order is more conditional than the headlines suggest. Here's what each part asks for, and where it stands as of October 16, 2026:
| Section | What it directs | Deadline | Status, Oct 16 |
|---|---|---|---|
| Sec. 2(a)–(b): tax deferral | Treasury decides whether 26 U.S.C. 7508A authorizes relief, including whether a qualifying event has occurred. If so, it defers the diesel taxes under section 4041 incurred Oct 5–Dec 31, 2026, without penalties or interest. | 5 days | IRS says guidance is coming; no published determination found |
| Sec. 2(c): penalty relief | IRS announces it won't impose section 6715 dyed-fuel penalties on highway sales or use, and addresses semimonthly deposit penalties. | 5 days | Done Oct 14 (IR-2026-122) |
| Sec. 3: guidance | Treasury spells out the relief, conditions, who is covered, the dates, and "the date by which postponed taxes must be paid." | None set | Not issued |
| Sec. 4: forgiveness | Treasury explores ways, "including legislation," to eliminate the deferred tax. | None set | No outcome yet |
| Sec. 5: inspections | Treasury decides how the IRS allocates tank inspections and fuel sampling during the relief. | None set | IRS: no federal on-road dye inspections |
| Sec. 6–8: other agencies | FMCSA keeps up safety audits and inspections; USDA works on dyed diesel supply for farms; the White House encourages states to match. | None set | Ongoing; states acting one by one |
Order text from whitehouse.gov and the Federal Register. Statuses are FuelGo's reading of IRS and agency pages as of October 16, 2026.
What's outWhat the IRS has issued: IR-2026-122
The IRS answered the order on October 14, 2026 with news release IR-2026-122. So there is federal guidance, and it says more than many buyers expect:
- No federal dyed-fuel penalties on highways. The IRS won't penalize dyed diesel sold for use or used on highways nationwide.
- Retroactive to October 1. The relief runs from October 1 through December 31, 2026, four days earlier than the order's October 5 start. The IRS gives no reason for the earlier date.
- Collection and enforcement paused. The IRS says "ordinary procedures for collection and enforcement will be suspended," and that no federal inspections of on-road dyed fuel use will occur.
- Deposit and record penalties waived. No penalties for missed semimonthly deposits or inadequate records tied to this tax. Taxpayers don't need records to prove they qualify, and sellers and distributors don't have to investigate how the fuel is used.
- Who normally owes the tax. The person who sells the dyed diesel at retail or, if it wasn't bought at retail, the vehicle operator.
- Federal only. The relief doesn't touch state fuel taxes or penalties. The IRS says "many, but not all" states have provided similar relief.
IR-2026-122 is a news release, not a formal IRS notice or revenue procedure. As of October 16, we found no notice, Internal Revenue Bulletin item or Federal Register rule implementing the order, and the IRS newsroom lists nothing newer on it.
What's missingWhat's still unanswered
The IRS release itself says more is coming. It "anticipates" guidance on postponing the tax under section 7508A and says forthcoming guidance "will detail how this relief applies to Form 720." Until that's out, these questions have no official answer:
| Question | Answered? | What the sources say |
|---|---|---|
| Is the tax deferred or forgiven? | Partly | Deferred. The order and IRS only commit to exploring forgiveness. EY says the relief affects only the timing of payment. |
| When is the deferred tax due? | No | Section 3 of the order requires Treasury to set that date. It hasn't been published. |
| Who pays it: retailer, operator, distributor? | No | IR-2026-122 names the retail seller or the operator as the normal taxpayer. Energy Marketers of America (EMA) says marketers could be among those liable; the covered taxpayers haven't been named. |
| How is it reported on Form 720? | No | The IRS says forthcoming guidance will cover Form 720 and other forms. |
| What about the 0.1¢ LUST tax? | Not addressed | Dyed diesel normally pays the 0.1¢ LUST tax (IRS Pub. 510). Neither the order nor IR-2026-122 mentions it. |
| How does IFTA treat it? | Partly | Federal excise isn't on the IFTA return. State tax still is, and IFTA's executive director says each state must issue its own order. |
| What happens after Dec 31, 2026? | Partly | Federal relief ends unless extended, and normal rules return. Nothing addresses dyed fuel bought in the window but burned on the road later. |
| Does EPA allow dyed fuel in road vehicles? | No action | EMA says EPA rules generally bar visible red dye in highway diesel without a waiver, and road fuel must still meet the 15 ppm ULSD standard. EPA's fuel waiver page lists no 2026 waiver for dyed diesel in highway vehicles. |
Why Treasury's full guidance isn't out yet
The IRS hasn't said why, and it hasn't given a date. What the documents do show is that the deferral was conditional from the start.
The order gave Treasury 5 days to decide whether section 7508A authorizes relief, "including whether a qualifying event has occurred." That statute lets Treasury postpone tax deadlines, for up to a year, for taxpayers affected by a federally declared disaster, a significant fire, or a terroristic or military action. EY notes that Treasury must first make that determination and identify the affected taxpayers. The IRS release says it "anticipates" 7508A guidance. As of October 16, we found no published determination.
The penalty piece also came after the order's 5-day deadline: the order is dated October 5, and the IRS announcement came October 14. Industry groups are waiting too. EMA told members the relief depends on "Treasury determinations and guidance not yet issued." The American Trucking Associations said it will review the IRS's implementing guidance when it's available, the AP reported.
The taxDeferral, not repeal: is the tax still owed?
The federal diesel tax is 24.4 cents a gallon (IRS Form 720, IRS No. 60). The order defers the tax under section 4041 for highway use of dyed diesel. It doesn't cancel it. Section 4 tells Treasury to "explore avenues, including legislation" to remove the obligation, which is a long way from removing it.
Tax analysts read it the same way. EY says the relief affects only the timing of payment and shouldn't be read as repeal or forgiveness. EMA puts it more bluntly: "Deferral is not forgiveness." The National Agricultural Law Center says the deferral doesn't remove the underlying liability, and that forgiving it "would have to be undertaken by Congress."
So the safe working assumption is that highway gallons burned in the window may carry a federal tax bill later, at a date Treasury hasn't set. That's why tracking them matters even though the IRS says records aren't needed to qualify for penalty relief.
IR-2026-122 says the retail seller normally owes the tax, or the operator if the fuel wasn't bought at retail. IRS Publication 510 says the operator is generally liable, with the seller jointly liable when it knows the fuel is for a taxable use. The forthcoming guidance should settle who pays the deferred amount.
Which states allow dyed diesel on highways
The federal order doesn't change state law. Each state decides whether to waive its own dyed-fuel penalties and taxes, and most that have acted limit relief to farm or timber vehicles. This list is as of October 16, 2026, from state government sources. It changes week to week, so confirm with the state before you rely on it.
| State | What it did | Window | Who and what's covered |
|---|---|---|---|
| Alabama | Governor directed ALEA to pause dyed diesel enforcement | 120 days from late Sept. 2026 | Agriculture and timber |
| Arkansas | EO 26-15 suspends state penalty | Sept 30 – Oct 30, 2026 | Arkansas-registered farm and forestry trucks; IFTA-licensed vehicles excluded |
| Florida | EO 26-201; state enforcement and penalties suspended | From Oct 6, 2026, for the orders' period | Farming and hauling agricultural commodities only |
| Georgia | State penalties waived for selling, delivering and using dyed fuel on road | Oct 6 – Nov 5, 2026 | All 159 counties; penalties only |
| Illinois | EO 2026-08; no penalty for dyed diesel from bulk storage | Oct 6 – Dec 31, 2026 | Farming and agricultural use |
| Indiana | EO 26-34 suspends dyed diesel restrictions | From Sept 30, 2026, for the energy emergency | Farmers and timber harvesters hauling their products |
| Kentucky | EO 2026-667 suspends state restrictions and penalties | From Oct 8, 2026; ends no later than Dec 31 | Public roads; approved by the Attorney General |
| Louisiana | State penalty waived (RIB 26-018) | Sept 23 – Oct 22, 2026 | Farm and forest-products vehicles; state excise ($0.2000/gal) must be paid |
| Michigan | EO 2026-15 suspends dyed diesel rules | Oct 12 – no later than Dec 31, 2026 | Vehicles with farm or wood harvester plates |
| Missouri | EO 26-20 suspends state restrictions and penalties | Oct 9 – Dec 31, 2026 | All vehicles on Missouri-operated highways |
| Montana | EO 11-2026 suspends enforcement | Through Nov 23, 2026 | Commercial vehicles in agriculture and timber |
| Nebraska | EO 26-21; state penalties waived, refunds offered | Sept 24 – Dec 23, 2026 | Hauling Nebraska agricultural products |
| North Carolina | Penalties waived (NCDOR notice; Session Law 2026-62) | Through Dec 31, 2026; start date Oct 1 or Oct 9 depending on the notice | Farming and agricultural use; operator or seller pays state excise. NC's excise rate is separately zero Oct 10 – Nov 30 |
| North Dakota | Diesel emergency executive order | Sept 29 – Nov 30, 2026 | Licensed vehicles used in agricultural operations |
| Oklahoma | Governor's letter pauses enforcement | 120 days from Sept 28, 2026 | Farm vehicles |
| Texas | Disaster declaration suspends dyed diesel highway restrictions | From Sept 28, 2026 | State tax ($0.2000/gal) still owed on highway use |
State excise figures are from FuelGo's diesel tax data as of October 5, 2026. Relief terms are from each state's governor or revenue department. Several orders were extended or replaced in their first weeks, so check the source.
States that hadn't matched it, as reported: Minnesota's Department of Revenue said the federal order doesn't change Minnesota law on dyed diesel or the taxes that apply (KTTC, October 7). In New York, a state assemblyman said on October 7 that New York hadn't matched the federal action (WCAX). Montana's transportation department first said dyed diesel stayed illegal on its roads, then issued the limited order above. That's how fast this moves.
Normal clear and dyed rates for every state are on our diesel taxes by state page. Those are standard rates; temporary suspensions aren't subtracted.
Practical stepsWhat fuel buyers should do now
- Check the state, not just the IRS. Federal relief doesn't make dyed fuel legal on a state's roads. Most state orders cover farm or timber vehicles only. North Carolina warns that a vehicle running dyed fuel outside the state can face other states' penalties.
- Don't assume dyed fuel is fine in your fleet. Check whether your vehicles fit your state's order: plate type, cargo, route and dates. If they don't, clear diesel is still the only legal road fuel there.
- Log every highway gallon anyway. The IRS doesn't require records for penalty relief, but the tax is deferred, not forgiven. EY advises tracking these liabilities, and EMA suggests sellers document highway sales and the customer's use. Record date, gallons, vehicle and state.
- Keep state tax and IFTA straight. Texas still taxes dyed diesel used on highways. Louisiana and North Carolina tie relief to paying state excise. IFTA carriers still report state tax on the IFTA return.
- Mark December 31 on the calendar. The federal relief ends then unless extended, and Louisiana, Arkansas and Georgia end sooner. Plan to run dyed fuel out of road vehicles or flush tanks before the end date. North Carolina advises flushing.
- Handle fuel bought now but used later. The relief covers dyed fuel sold for or used on highways during the window. Neither the order nor the IRS covers road use after December 31. Dyed fuel still in storage can go to off-road equipment, generators and other nontaxable uses as usual.
- Watch for Treasury's guidance. The payment date, the taxpayer and the Form 720 rules are still open. Check the IRS newsroom before your next quarterly filing, and talk to your tax advisor before you change what goes into road vehicles.
Running the numbers on fleet fuel? The fleet fueling cost calculator uses standard tax rates, not the temporary relief, and shows the dyed-diesel tax gap for your state.
Open the calculator →For the normal rules on who can burn dyed diesel, and the penalties outside the relief window, see dyed diesel vs clear diesel and our off-road diesel compliance guide. For weekly prices and market context, see the diesel price report.
This page summarizes public documents as of October 16, 2026. It is general information only and isn't legal, tax or accounting advice, and reading it doesn't create an attorney-client or any other professional relationship with FuelGo. The rules may change after this date. Talk to your tax advisor or attorney about your own situation, and confirm state rules with each state's revenue department before you act.
Dyed and clear diesel delivery from FuelGo
FuelGo delivers off-road dyed diesel and clear on-road diesel nationwide. Running a mixed fleet? You don't need two suppliers. We deliver both on the same account, often on the same route, and bill them as separate line items. Invoices are itemized by gallons, product and site.
Drops run from 20 to 4,400 gallons, with transport loads up to 7,500. Dispatch runs 24/7/365, and a dispatcher replies within the hour.
Common questionsDyed diesel executive order FAQ
Is dyed diesel legal on highways right now?
Do I still owe federal tax on dyed diesel used on the road?
Has the IRS issued guidance on the executive order?
When does the dyed diesel relief end?
Does the federal relief cover state fuel taxes and penalties?
Why does the IRS relief start October 1 when the order says October 5?
How does the dyed diesel relief affect IFTA reporting?
What should I do with dyed fuel in a truck's tank after December 31?
Sources: Executive Order 14435, Emergency Tax Relief on Diesel Fuel (Oct. 5, 2026) · Federal Register, 91 FR 64747 (Oct. 9, 2026) · White House fact sheet (Oct. 5, 2026) · IRS IR-2026-122 (Oct. 14, 2026) · 26 U.S.C. 7508A · IRS Instructions for Form 720 · IRS Publication 510 · EY Tax News (Oct. 8, 2026) · National Agricultural Law Center (Oct. 8, 2026) · Energy Marketers of America (Oct. 6, 2026) · Land Line, IFTA comments (Oct. 8, 2026) · AP via PBS NewsHour (Oct. 7, 2026) · EPA fuel waivers · Alabama · Arkansas · Florida TIP 26B05-03 · Georgia MFT-2026-04 · Illinois EO 2026-08 · Indiana DOR · Kentucky EO 2026-667 · Louisiana · Michigan EO 2026-15 · Missouri EO 26-20 · Montana EO 11-2026 · Nebraska EO 26-21 · NCDOR dyed diesel notice · NCDOR Oct. 12 notice · North Dakota · Oklahoma · Texas Comptroller · KTTC, Minnesota (Oct. 7, 2026) · WCAX, New York (Oct. 7, 2026). State excise figures from FuelGo's diesel tax data as of October 5, 2026. All information as of October 16, 2026.