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States Split on Dyed Diesel After Trump Order: Six Ease Penalties, Washington Holds Firm

So whatCarriers & Owner-operators: dyed-diesel relief stops at the state line. Iowa covers listed farm loads through Feb. 2, 2027; Georgia covers on-road use through Nov. 5; Kentucky's order runs 30 days unless extended; Tennessee covers farm and forestry hauling through October; South Dakota only pauses enforcement; Washington still bans it on public roads.
FreightFiles Desk | October 8, 2026

President Trump's October 5 executive order directs the Treasury to decide whether it can defer the federal tax on highway use of dyed diesel, without penalties, through December 31, 2026. States then moved on their own, and the details vary.

Iowa: Gov. Kim Reynolds proclaimed a disaster emergency October 6 suspending state penalties and tax provisions (Iowa Code 452A.74A, 423.2, 423.5, 452A.3) for dyed diesel used to haul specific farm products — soybeans, corn, hay and similar — on any public road. On October 7 she expanded the list to add livestock, livestock feed and other farm products. The suspension runs through February 2, 2027.

Georgia: Gov. Brian Kemp amended an existing state of emergency to waive state penalties for selling, delivering or using dyed fuel oil for on-road use by any vehicle, not just farm loads, through November 5.

North Carolina: Gov. Josh Stein directed the Department of Revenue to lift the penalty on highway use of red-dyed diesel through year-end; the excise tax itself is still owed when filing returns.

South Dakota: Gov. Larry Rhoden told state troopers to deprioritize dyed-diesel inspections. He said he lacks authority to waive the statutory tax himself, so tax may still be owed pending legislation.

Kentucky: Gov. Andy Beshear's Executive Order 2026-667, signed October 7, suspends the state law barring untaxed or dyed diesel on public highways (KRS 138.502(1)-(3)) and its penalties, letting Kentucky farmers and truckers use dyed diesel on public roads from October 8. Attorney General Russell Coleman approved the suspension October 7 for the period state law allows (KRS 39A.090(2) limits such orders to 30 days unless the General Assembly approves more).

Tennessee: The Department of Revenue says that, under Gov. Bill Lee's directive, enforcement of dyed-diesel restrictions is suspended through the end of October 2026 for people in agricultural or forestry operations using vehicles on state highways to harvest and haul crops, livestock, timber and other forest products, or to move farm and forestry supplies and equipment.

Washington: The Department of Licensing went the other way. In an October 7 notice it said the federal announcement "does not change Washington State law or fuel tax requirements": untaxed dyed diesel may not be used on Washington public roads unless state law authorizes it, and IFTA reporting requirements are unchanged.

Dyed diesel is untaxed, off-road fuel — not a lower-taxed product. None of these state actions affects federal tax, and relief granted in one state does not apply once a load crosses into another.

All sources

States Split on Dyed Diesel After Trump Order: Six Ease Penalties, Washington Holds Firm
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