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# Trump Opens Tax-Free Red Diesel to Highway Use, but Wisconsin Law Still Bans It
- URL: https://foxwatershed.com/red-dyed-diesel-order-wisconsin/
- Published: 2026-10-02T02:18:00.000Z
- Updated: 2026-10-15T01:21:32.000Z
- Description: Trump's order defers the federal tax on dyed diesel burned on highways through Dec. 31. Wisconsin, where diesel averages $6.31 a gallon, still bans the fuel in licensed vehicles and hasn't offered relief of its own.
- Author: Fox Watershed Staff
- Tags: National, Wisconsin State Politics

President Donald Trump signed an executive order Monday night in Grand Island, Neb., that lets anyone buy red-dyed diesel, the untaxed fuel normally reserved for tractors, construction equipment and other off-road machines, and burn it on public highways through the end of the year.1,2 For Northeast Wisconsin truckers, the federal half of that offer is real. The state half doesn't exist. Wisconsin law still bars dyed diesel from any vehicle licensed with the Department of Transportation, and neither Gov. Tony Evers nor Republican legislative leaders have announced any fuel relief of their own.3,4

Diesel in Wisconsin averaged $6.31 a gallon Tuesday, according to AAA, down from $6.49 a week earlier but about $2.84 more than the $3.47 drivers paid a year ago.5 The Green Bay metro average was $6.35.5

## What the Order Does

The order directs the Treasury secretary, in consultation with the secretary of war, to defer the federal excise tax on dyed diesel used on roads for the rest of 2026, without interest or penalties, and to explore ways to eliminate the deferred bill entirely.1 It tells the Transportation Department to coordinate with states, industry and labor groups, and directs the Agriculture Department to keep dyed diesel available to farmers in high-demand areas.1 Nebraska Public Media reported that the deferral runs from Oct. 5 through Dec. 31, that the IRS is to announce it won't penalize sellers or users in that window, and that Treasury has five days to determine whether federal law allows the relief.2

The federal highway diesel tax totals 24.4 cents a gallon, a 24.3-cent excise tax plus a 0.1-cent fee.2,6,7 The White House estimates a trucker filling a 250-gallon tank saves about $60 from the federal deferral alone, and more than $100 where states take matching action.8 At the rally, Trump promised savings of more than $100 a fill-up after telling the crowd he didn't "know what the hell" red dye diesel is.9

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## The Tax Is Deferred

Congress writes federal fuel taxes into statute, and Reuters reported before the signing that a broader tax holiday could require congressional action.7 The IRS has suspended dyed-fuel penalties before, after Hurricane Dorian, but still required operators and sellers to pay the normal highway tax.7 On the order's own terms, the tax is deferred, so buyers who run dyed fuel on the road this fall could still owe it later unless Treasury or Congress erases the obligation.1

Patrick De Haan of GasBuddy questioned the premise. "Taxes aren't the problem, supply is," he told the Associated Press, adding that the order could help on-road users but not farmers, who already run dyed diesel in their equipment.10 Farm groups had pushed for it anyway. The American Farm Bureau Federation asked the administration last week to suspend the federal highway diesel tax for agricultural hauling and waive penalties for farmers using dyed diesel on highways.11

There's a supply risk on the farm side too. Analysts told TIME that heavier on-road buying could drain dyed diesel inventories and push up costs for farmers in the middle of harvest.8 U.S. diesel hit a record above $6.50 a gallon on Sept. 22, according to AAA figures cited by NBC News and TIME.8,9 NBC reports the price has climbed more than 70% since the Iran war began Feb. 28.9 NBC News attributes the latest jump to Ukrainian drone strikes on Russian refineries, which led the Kremlin to ban diesel exports through at least the end of this month.9 G7 nations have also agreed to release 100 million barrels of diesel and crude from reserves.6

[The Diesel Ban BoomerangTrump wants to keep American diesel at domestically. The countries that buy it, and the U.S. debt they hold, could make that an expensive idea.![](https://storage.ghost.io/c/ed/b4/edb4fd27-66fb-4967-8c7f-ec1cf54dfb05/content/images/size/w256h256/2026/06/transparent-5.png)Fox Watershedhttps://www.facebook.com/emrouse02![](https://images.unsplash.com/photo-1654334036169-840615ab6a34?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wxMTc3M3wwfDF8c2VhcmNofDR8fGRpZXNlbHxlbnwwfHx8fDE3OTA2NTMzODh8MA&ixlib=rb-4.1.0&q=80&w=2000)](https://foxwatershed.com/the-diesel-ban-boomerang/)

## Wisconsin Hasn't Moved

Wisconsin's Department of Revenue says dyed diesel "may not be used in a vehicle that is licensed or required to be licensed" with DOT.3 The penalty for selling or using it improperly is the greater of $1,000 or twice the tax owed.3 The state charges 30.9 cents a gallon in motor fuel tax plus a 2-cent petroleum inspection fee, and the 30.9-cent rate hasn't changed since 2006.3,4 Unless state rules change, a Wisconsin trucker who fills up with dyed diesel under the federal deferral still risks state penalties.

Ten states had already allowed dyed diesel on highways before Monday: Alabama, Arkansas, Indiana, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma and Texas.8 Nebraska Gov. Jim Pillen's order suspended state penalties for 90 days for highway-registered vehicles and let producers seek refunds of diesel taxes paid hauling Nebraska crops and livestock.12 U.S. Agriculture Secretary Brooke Rollins, visiting World Dairy Expo in Madison on Sept. 30, urged Wisconsin lawmakers to look at those states' steps.13

WPR reported that suspending Wisconsin's gas tax would take a special session, a bill passed by both chambers and the governor's signature, and would cost the state roughly $90 million a month from a tax that raises about $1 billion a year.4 Spokespeople for Evers, Assembly Speaker Robin Vos (R-Rochester) and Senate Majority Leader Devin LeMahieu (R-Oostburg) declined to respond when WPR asked about it.4 Neither major candidate for governor, Republican Tom Tiffany or Democrat David Crowley, has called for lifting the tax, though Crowley supports repealing the state's minimum markup law on fuel.4

## Who Pays for the Roads

Federal fuel taxes fund the Highway Trust Fund, which pays for highway and transit projects. Diesel taxes brought in $10.8 billion of the fund's $43 billion in tax revenue in fiscal 2023, according to the Tax Policy Center, which projects shortfalls returning by the end of 2028.14 The White House fact sheet doesn't say how deferred or forgiven diesel revenue would be replaced.1

---

1. [Fact Sheet: President Donald J. Trump Promotes Diesel Affordability](https://www.whitehouse.gov/fact-sheets/2026/10/fact-sheet-president-donald-j-trump-promotes-diesel-affordability/?ref=foxwatershed.com)
2. [Trump rallies for Nebraska Republicans in Grand Island, signs diesel order](https://nebraskapublicmedia.org/en/news/news-articles/trump-rallies-for-nebraska-republicans-in-grand-island-signs-diesel-order/?ref=foxwatershed.com)
3. [Motor Vehicle Fuel Tax Information Including Petroleum Inspection Fee (Publication 307)](https://www.revenue.wi.gov/dor%20publications/pb307.pdf?ref=foxwatershed.com)
4. [States are lifting gas taxes to ease pain at the pump, but not Wisconsin](https://www.wpr.org/news/states-lifting-gas-taxes-but-not-wisconsin?ref=foxwatershed.com)
5. [Wisconsin Average Gas Prices](https://gasprices.aaa.com/?state=WI&ref=foxwatershed.com)
6. [Trump allows cheaper, dyed diesel on highways to blunt historic fuel-cost spike ahead of midterms](https://www.cnbc.com/2026/10/06/us-diesel-fuel-prices-iran-ukraine-energy-crisis-.html?ref=foxwatershed.com)
7. [White House Readies Diesel Relief Order as Tax Questions Loom](https://www.agbull.com/white-house-readies-diesel-relief-order-as-tax-questions-loom/?ref=foxwatershed.com)
8. [Trump Expands Access to Tax-Exempt Dyed Diesel to Try to Lower Fuel Costs](https://time.com/article/2026/10/06/us-dyed-diesel-federal-highway-tax-fuel-costs-trump-farmers/?ref=foxwatershed.com)
9. [Aiming at fuel costs, Trump opens tax-exempt 'red dye' diesel to all drivers](https://www.nbcnews.com/business/energy/aiming-fuel-costs-trump-opens-tax-exempt-red-dye-diesel-rcna601748?ref=foxwatershed.com)
10. [Trump signs order extending tax-free use of red-dyed diesel during midterm stop in Nebraska](https://www.wsls.com/news/politics/2026/10/05/trump-heads-to-nebraska-on-monday-where-his-plan-to-import-more-beef-has-angered-ranchers/?ref=foxwatershed.com)
11. [Farm Bureau Calls for Diesel Tax Relief as Harvest Costs Climb](https://www.q106.com/2026/10/02/farm-bureau-calls-for-diesel-tax-relief-as-harvest-costs-climb/?ref=foxwatershed.com)
12. [Nebraska, 2 Other States Allow Farm Diesel Use in Road Vehicles Amid Fuel Concerns](https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2026/09/25/nebraska-2-states-allow-farm-diesel?ref=foxwatershed.com)
13. [Ag Secretary Brooke Rollins addresses rising diesel, beef prices during Wisconsin visit](https://wtmj.com/news/2026/10/01/ag-secretary-brooke-rollins-addresses-rising-diesel-beef-prices-during-wisconsin-visit/?ref=foxwatershed.com)
14. [What is the Highway Trust Fund, and how is it financed?](https://taxpolicycenter.org/briefing-book/what-highway-trust-fund-and-how-it-financed?ref=foxwatershed.com)