Trump Defers Federal Fuel Tax on Dyed Diesel as Prices Hit $6.32

President Donald Trump signed an executive order on Monday that will allow American drivers to access red-dyed diesel at lower tax rates, making it more affordable. This action temporarily defers the federal diesel tax on that fuel through the end of the year. The federal diesel tax currently stands at $0.244 per gallon, which amounts to roughly $60 on a 250-gallon fill. When states match this federal action, savings could exceed $100 per fill, significantly impacting the costs for drivers who haul freight and grow food.

In his rally in Nebraska, President Trump stated that the executive order would "allow anyone to purchase tax-free red-dyed diesel for any reason." Red-dyed diesel, also known as off-road diesel, is used in agriculture and construction industries and is cheaper than the diesel sold for broad use because it is not subject to the federal excise duty. Red dye is added to distinguish it from the fuel sold for general use.

Despite the relief offered by the executive order, analysts believe it may not make a significant difference in terms of affordability for drivers. Diesel prices have remained a major financial burden for Americans and other nations worldwide due to supply shortages resulting from war-related refinery outages in the Middle East and Russian refinery damage from Ukrainian drone attacks.

Even though prices dropped slightly from their all-time high of $6.53 per gallon in late September, diesel continued to hover around $6.3207 per gallon as of October 5th, according to AAA data.