Trump Orders Temporary Diesel Tax Relief for Farmers During Harvest Season
On October 5, President Donald Trump signed an executive order allowing temporary highway use of dyed diesel, providing tax and penalty relief for farmers, truckers, and other fuel-dependent industries through December 31. This move comes as U.S. agriculture faces high fuel costs during harvest season, with the national average price of on-highway diesel reaching $6.199 per gallon. The order directs federal agencies to offer relief on federal excise taxes and penalties for using dyed diesel on highways, potentially saving farmers significant costs.
Dyed diesel, typically used for off-road farm equipment, is exempt from highway fuel taxes. The federal highway diesel tax is 24.4 cents per gallon, with state taxes averaging an additional 35.5 cents. Trump’s order aims to provide immediate regulatory relief, though some tax details depend on Treasury guidance and federal law. The White House estimates savings of over $100 for every 250 gallons of diesel when states provide corresponding relief, but the actual benefit varies by location due to differing state fuel taxes and exemptions.
The tax relief is crucial as diesel prices have surged, adding thousands to harvest costs. The American Farm Bureau Federation estimates that the increase in farm diesel prices has added about $7.98 per acre to corn harvest costs and $3.56 per acre for soybeans. For a representative corn operation, the year-over-year increase in diesel costs adds approximately $2,227 to the harvest fuel bill. The order also affects livestock operations and the broader agricultural supply chain, potentially reducing transportation costs during peak harvest season.
Several states had already adopted temporary dyed-diesel flexibility before the federal action. Farm groups, including the American Farm Bureau Federation, have welcomed the move, highlighting its potential to provide meaningful savings. However, the measure is a short-term response, with the Dec. 31 expiration leaving open questions about long-term solutions for agricultural energy costs.