Dyed Diesel Executive Order:

What We Know as of Oct. 7

On Monday afternoon, Oct. 5, President Trump signed an Executive Order (EO) directing temporary federal tax relief for highway use of dyed diesel. Dyed diesel is normally reserved for off-road use and is dyed red to distinguish it from fuel subject to highway taxes.

The order is intended to provide relief at the pump, but savings are not guaranteed and how the rules apply in Kansas remains unclear. The information below comes from several Kansas state agencies and ATA.

KMCA currently advises extreme caution for any carrier considering dyed diesel.

What the Executive Order Directs

The order directs Treasury and the IRS to:

Determine eligibility for tax deferral. Within five days, Treasury must determine whether it has legal authority to grant relief and which taxpayers qualify. If it does, eligible taxes incurred from Oct. 5 through Dec. 31, 2026, would be deferred without interest or penalties, to the extent the law allows.

Announce dyed diesel penalty relief. Within five days, Treasury must direct the IRS to announce that certain penalties will not apply to dyed diesel sold for or used on highways during that period, including penalties for missed semi-monthly tax deposits.

Publish implementing guidance. This guidance must identify who is covered, the conditions and deadlines, and when deferred taxes must ultimately be paid.

Explore tax forgiveness. Treasury must look at options, including legislation, to eliminate the deferred taxes. The order itself does not forgive them.

The order also calls for federal coordination on fuel access, protection of agricultural fuel distribution, and encouragement of similar action by states. It specifically directs FMCSA to continue required compliance enforcement.

"Directs" is the key word. As of Oct. 7, no federal guidance has been issued.

What About Kansas?

As of Oct. 7, Kansas law on dyed diesel has not changed. The Kansas Department of Revenue (KDOR) is still assessing the order, and we will share updates as soon as we hear from any state agency.

Kansas law generally prohibits using dyed diesel on the road.

There is an exception for vehicles fueled outside Kansas in a state that allows it.

Even when fueling out of state, Kansas fuel tax and IFTA obligations may still apply.

KMCA is in contact with the Kansas Corporation Commission (KCC), Kansas Department of Transportation (KDOT), Kansas Highway Patrol (KHP), KDOR, and Governor Kelly's office.

What This Means for Your Operation?

Do not make changes based solely on the EO. We recommend carriers wait until Treasury issues its guidance.

This is not a repeal of diesel taxes. The EO offers temporary penalty relief and a possible tax deferral. It does not currently offer tax forgiveness.

The EO does not change Kansas law.

Verify before you act. Confirm your eligibility, whether your supplier is participating, state requirements where you operate, and how the fuel will be reported.

Keep complete records. Retain all fuel purchase and mileage records.

Dye residue may cause issues later. Dyed diesel can leave dye in fuel systems, which could be grounds for enforcement after federal and state relief ends.

Check your warranty. Ask your equipment supplier whether dyed diesel affects your warranty before using it.

What Are the Potential Savings?

Federal statute identifies federal diesel tax is 24.4 cents per gallon, or about $60 on a 250-gallon fill.

Claims of savings over $100 per fill assume states will also suspend their fuel taxes. Kansas has not done so.

Even the $60 is uncertain, because deferred taxes have not been forgiven and may still come due.

This is an evolving situation, and we will keep members updated as we learn more.

If you have any questions, please send an email to KCMAOffice@kmca.org.