ALEXANDRIA, Va. — President Donald Trump signed an executive order temporarily easing restrictions on red-dyed diesel, allowing drivers to use the fuel without immediate federal taxes or penalties.
The order defers the federal excise tax through 2026 and directs the Treasury secretary to consider ending the payment requirement. Operators, however, could ultimately owe the deferred tax.
For motorcoach operators, potential savings come with questions about state enforcement, future tax obligations, and dye that can remain in a vehicle’s fuel system.
Red-dyed diesel, also known as off-road diesel, is chemically the same as clear diesel. It is exempt from the federal highway excise tax of 24.4 cents per gallon, which funds road construction and maintenance. Its use is normally restricted to off-road equipment, including farm tractors, construction machinery and stationary generators.
Some states have previously suspended fuel taxes, and the administration is encouraging others to follow. It remains unclear how many states will participate or ease enforcement of restrictions on red-dyed fuel.
The dye helps law enforcement officers and fuel inspectors identify untaxed fuel during roadside tank checks and weigh station inspections. Unauthorized use in highway vehicles can result in back taxes and substantial fines, often calculated per gallon or assessed at a minimum of $1,000, whichever is greater.
Another concern is that dye can remain in fuel lines and filters after a vehicle returns to clear diesel. Operators typically run the tank nearly dry and refill it three or four times to dilute the color, but detectable traces may remain in filters. Completely removing the residue requires a mechanic to flush the fuel system.
Ken Presley of the United Motorcoach Association urged caution.
“Because most operators already receive a 17¢ exemption from the 24.4¢ tax, the additional savings may not justify the risk of repaying taxes later, inconsistent state enforcement, and lingering dye. It may not be worth the grief,” Presley said.
