On Monday, October 5, President Trump signed an executive order temporarily expanding access to red-dyed diesel, a lower-cost fuel option typically used for off-road equipment.

The executive order directs the U.S. Department of the Treasury and IRS to:

• Provide relief from certain federal penalties for using red diesel on highways through December 31, 2026.
• Delay certain federal diesel taxes without interest or penalties.
• Explore whether those delayed federal taxes could ultimately be eliminated. [1]

Red diesel typically costs less because certain highway fuel taxes are not included in the price at the pump. For carriers already dealing with high diesel costs, that raises an important question: Could red diesel actually save your business money?

The answer depends on more than the price at the pump. Federal tax relief, state fuel taxes, availability, and IFTA requirements can all affect your actual savings.

For a full breakdown of the current relief, eligibility requirements, dates, taxes, and supporting guidance across all 50 states, please view our Red Diesel Relief State-by-State Guide here!

Before filling up with red diesel, here’s what carriers need to know.

Why Is Red Diesel Relief Being Offered?

Red-dyed diesel is typically used for off-road equipment and is not intended for normal highway use. So why are truckers suddenly hearing about it?

Harvest season puts additional demand on diesel because fuel is not only needed for trucks hauling agricultural products, but also for the equipment harvesting and moving those products before they ever reach the highway.

In September, Nebraska responded to diesel shortages and rising costs with temporary agricultural fuel relief and higher weight allowances for qualifying loads. [2]

The federal government has now taken broader action. The October 5 executive order provides temporary relief for using red diesel on highways. [1]

That background helps explain why some state relief is limited to agricultural transportation. For a carrier, the next question is whether the vehicle, load, and route meet the rules.

Does Red Diesel Mean Tax-Free Diesel?

A postponed fuel tax does not mean the tax is eliminated. A carrier may pay less at the pump today but still owe taxes later. Treasury guidance must identify who qualifies, any conditions on relief, and when postponed taxes must be paid. [1]

Can You Use Red Diesel in Every State?

The federal order is only one piece of the puzzle. Each state has its own rules for highway use, fuel taxes, exemptions, and reporting, making things more complicated for interstate carriers.

Texas is a good example. While the state temporarily allows red diesel to be used on highways, its 20-cent-per-gallon fuel tax may still apply. In other words, being allowed to use red diesel does not necessarily make it tax-free. [3]

Nebraska takes a different approach, offering fuel-tax relief for certain qualifying agricultural transportation. Some eligible IFTA carriers may even qualify for relief without using red diesel. [4]

Arkansas has different rules. Its relief applies to certain agricultural and forestry vehicles registered in the state, but does not apply to vehicles registered under IFTA. [7]

This is another example of why carriers need to check the rules in each state where they operate.

Where To Find Red Diesel?

Red diesel may not be available at your regular truck stop, so you may need to find another fueling location or supplier.

Before going out of your way, make sure the savings are worth the trip. For example, saving 30 cents per gallon on 200 gallons saves $60 at the pump, but extra miles, time, fees, and taxes could quickly reduce those savings.

A cheaper gallon doesn’t always mean a cheaper trip.

What Red Diesel Means for IFTA?

The International Fuel Tax Agreement, or IFTA, is the system carriers use to report fuel use across participating states and Canadian provinces.

IFTA divides state and provincial fuel-use taxes based on where a truck travels. Federal diesel tax relief is separate and does not automatically eliminate those taxes.

Here are a few things carriers should keep in mind:

• Fuel-use tax may still be due. If a state has not exempted your travel, you may owe its tax even if that tax was not collected when you purchased the fuel. [3]
• Keep reporting your miles and fuel. You still need to include untaxed diesel when reporting your total fuel gallons. Report all travel, including miles a state specifically allows you to treat as non-taxable, using the current filing instructions. Do not simply leave those miles off the return. [5]
• Claim credit only for fuel tax actually paid. A tax-paid credit is a credit for fuel taxes you already paid when purchasing fuel. Keep receipts showing those taxes, and clearly identify dyed-fuel purchases when submitting records to Aladdin. Buying red diesel does not automatically qualify you for that credit. [6]
• Relief in one state does not make the entire trip exempt. Eligibility can depend on the state, dates, cargo, vehicle, and miles traveled. [4, 7]
  

What Happens When Red Diesel Relief Ends?

Carriers also need to pay attention to when temporary red diesel relief expires, especially because federal and state expiration dates may differ.

Iowa, for example, warns that dyed fuel remaining in a truck’s tank after its state relief expires could create issues during an inspection. [8]

Make sure you know the expiration dates for every state where you operate, plan your fueling accordingly, and keep records of your red diesel purchases and use.

Should You Use Red Diesel?

There is no single answer for every carrier. Whether red diesel saves your business money depends on your operation, route, fuel prices, and the taxes that apply.

Before changing your fuel plan:

• Confirm you qualify. Make sure red diesel is permitted for your operation and route.
• Check each state’s rules. Eligibility and tax treatment can change when you cross state lines.
• Confirm availability and pricing. Make sure red diesel is available before going out of your way to find it.
• Compare the total cost. Consider additional mileage, time, fees, and taxes when calculating your potential savings.
• Keep your records. Save fuel receipts and trip records, and clearly identify dyed-fuel purchases when submitting records to Aladdin.
  
  

What Happens Next?

Federal and state guidance is still developing. The U.S. Department of the Treasury must provide additional details on the federal relief, including who qualifies and when deferred taxes must be paid. States may also issue additional guidance on highway use, fuel taxes, and IFTA reporting. [1]

Aladdin will continue to monitor guidance and contact state agencies as new information becomes available. For current rules and guidance across all 50 states, view our 2026 Red Diesel Relief State-by-State Guide here.

The bottom line: Red diesel may cost less at the pump, but that does not always mean it will save your business money. Before filling up, confirm you qualify, understand the taxes that apply, and make sure the overall savings make sense for your operation.

Information reviewed October 7, 2026. Temporary orders and agency guidance may change.

Sources

[1] White House — Emergency Tax Relief on Diesel Fuel, October 5, 2026
https://www.whitehouse.gov/presidential-actions/2026/10/emergency-tax-relief-on-diesel-fuel/

[2] Nebraska Governor — Agricultural Fuel and Weight Relief, September 24, 2026
https://governor.nebraska.gov/gov-pillen-issues-executive-orders-help-agriculture-community

[3] Texas Comptroller — Diesel Fuel Disaster Declaration Notice
https://comptroller.texas.gov/taxes/fuels/diesel.php

[4] Nebraska Department of Revenue — FAQs on September 24 Executive Orders, updated October 6, 2026
https://revenue.nebraska.gov/about/frequently-asked-questions/faqs-september-24-executive-orders

[5] Idaho State Tax Commission — IFTA Reporting: Total Miles and Fuel
https://tax.idaho.gov/taxes/product-excise-taxes/fuels-taxes-and-fees/consumer-fuels/ifta-licenses/ifta-reporting/idaho-ifta-reporting-step-1/

[6] Idaho State Tax Commission — IFTA Reporting: Tax-Paid Credits
https://tax.idaho.gov/taxes/product-excise-taxes/fuels-taxes-and-fees/consumer-fuels/ifta-licenses/ifta-reporting/idaho-ifta-reporting-step-5/

[7] Arkansas — Executive Order 26-15, September 2026
https://www.iftach.org/bulletins/AR-Executive%20Order%20EO%2026-15.pdf

[8] Iowa DOT — Dyed Diesel Guidance, updated October 7, 2026
https://iowadot.gov/media/15970/download?inline=