Trucking Laws · Nationwide · October 31, 2026

Red-Dyed Diesel Waiver: 31 States Have Joined and the USDA Is Urging the Other 19, While Truckers Face Fuel Terminal Delays in Iowa

By Big Rig Daily Staff

Update, 4:46 a.m. PT Oct. 31, 2026: This story was revised to add the IRS's own wording. In its Oct. 14 notice (IR-2026-122), the IRS said it will not impose a penalty on dyed diesel fuel used on highways from Oct. 1 through Dec. 31, 2026, for federal tax only. The statement that the federal waiver suspended the 24.4 cent tax is now attributed to Land Line and the USDA.

Thirty-one states have now joined a federal effort to let off-road red-dyed diesel be used on highways, and the U.S. Department of Agriculture (USDA) wants the other 19 to sign on. Land Line reported Oct. 30 that 31 states have issued corresponding orders waiving penalties not covered by the federal order, according to the USDA. Land Line, citing the USDA, said the federal waiver took effect Oct. 5 and described it as having suspended the national 24.4 cent fuel tax. The federal relief follows an Oct. 5 executive order. The Internal Revenue Service said Oct. 14 that it will not impose a penalty when dyed diesel fuel is sold for use or used on highways nationwide from Oct. 1 through Dec. 31, 2026, and that the relief applies to federal tax only, not state fuel taxes or penalties.

The push from Washington

Agriculture Secretary Brooke Rollins recently sent a letter commending governors of states that have issued emergencies and asking the other 19 to do the same. "Savings are maximized when states take corresponding action to suspend certain penalties, modify enforcement practices or take other actions intended to reduce unnecessary burdens on agricultural producers and transportation operators with respect to dyed diesel," the letter said.

In a post on X on Oct. 29, Rollins said the waiver "gives farmers, ranchers, and truckers another fuel option during harvest" and that combined federal and state relief "could save more than $640 MILLION." The USDA said it will keep working with state leaders on implementation.

What it has done to prices

The national diesel average was $6.32 per gallon, according to AAA, when the waiver was issued. As of Friday, Oct. 30, Land Line said, that average remained the same. For the bigger picture, see Big Rig Daily's story on diesel up 69% in a year.

Delays in Iowa

KCCI-TV in Des Moines, Iowa, recently reported that truck drivers in the central part of the state are dealing with significant delays at fuel terminals, with high demand forcing the closure of some terminals. Fuel, harvest and avian flu emergency orders remain in effect in Iowa, according to Land Line. Land Line did not link the delays to the dyed diesel waiver.

More information

The Internal Revenue Service has set up an FAQ page about the relief it announced earlier this month. Land Line said it answers questions about tax records, filing returns, interstate travel and dyed biodiesel mixtures. The IRS said in its Oct. 14 notice that it anticipates further guidance on postponing payment of the tax. Anyone planning to use dyed diesel should check the rules in each state they will drive through, since the IRS relief covers federal tax only. States that have issued orders may limit them, for example to farm use or a set end date, so check each state's order. Land Line did not list which states have and have not joined.

Earlier this month, Big Rig Daily covered Ohio's red-dyed diesel order.

Quick facts

• Federal relief: executive order Oct. 5, 2026; IRS says no penalty for dyed diesel used on highways Oct. 1 through Dec. 31, 2026. Federal tax only; state fuel taxes and penalties are not changed.
• States with matching orders: 31, according to the USDA.
• States urged to join: 19.
• Estimated combined savings: "more than $640 MILLION," per Secretary Rollins.
• AAA national diesel average: $6.32 on Oct. 30.

A question for readers

Does your state honor the waiver, and would you run dyed diesel on the highway?

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