Update, 15 October 2026: The IRS on 14 October issued IR-2026-122, announcing that it will not impose a penalty when dyed diesel fuel is sold for use or used on highways nationwide. The relief is retroactive to 1 October 2026 and remains in effect until 31 December 2026. During the period, ordinary collection and enforcement procedures for that penalty are suspended; IRS Fuel Compliance Officers are reassigned; no federal inspections of on-road dyed-fuel usage will occur; and taxpayers need not keep records solely to substantiate eligibility for this relief. The release says the IRS anticipates further guidance on postponing taxes under 26 U.S.C. 7508A for taxes imposed by 4041(a)(1)(A) or 4041(b)(1)(B), and that it will explore ways to eliminate deferred amounts — that guidance is not in IR-2026-122. The relief is federal only; many, but not all, states have similar state-level relief.

Update, 10 October 2026: The Federal Register published the order on 9 October as Executive Order 14435 (91 FR 64747, FR Doc. 2026-20855). As of about 7:40 a.m. ET on Saturday, 10 October, the IRS current-month release list still ends at IR-2026-120 (7 October), with nothing on dyed diesel, section 6715 penalties or 7508A deferral, and we found no Treasury determination. The order’s five-day window ran to about 10 October. On a separate track, Treasury’s sanctions office on 9 October issued General License 135, allowing Russian-origin diesel to be imported into the U.S. until 7 April 2027.

Update, 8 October 2026: As of the morning of 8 October, the IRS news-release page lists nothing on dyed diesel or 7508A relief. Its latest release is IR-2026-120 (7 October), on whistleblowers. The order’s five-day window for Treasury runs to about 10 October. Separately, on 6 October Illinois Gov. JB Pritzker issued a state disaster proclamation and signed Executive Order 2026-08. It directs the Illinois Department of Revenue and State Police to allow on-road use of dyed diesel typically used for agriculture during the fall harvest. That order covers state fuel-tax enforcement only; the federal penalty waiver still needs the IRS announcement.

On 5 October 2026 President Donald Trump signed an executive order titled Emergency Tax Relief on Diesel Fuel. Its stated purpose: “Restricted global diesel supply has led to rising prices,” and farmers and truckers “have been particularly hard hit.” The order does three main things. It tells the Treasury Secretary to decide whether he can defer certain federal diesel taxes. It tells the IRS to stop penalising the use of dyed diesel on highways. And it asks Treasury to look for a way to forgive the deferred tax. As of the morning of 7 October, no implementing IRS announcement appeared in the IRS newsroom.

The order does not cut the federal diesel tax. It defers certain payments, waives a penalty, and asks Treasury to “explore avenues, including legislation,” to forgive what is deferred.
Citizen impact: Dyed diesel is fuel sold without the federal highway tax for uses such as farm machinery. Putting it in a highway vehicle normally triggers the federal diesel tax of 24.3 cents a gallon plus a 0.1-cent trust-fund tax, and a penalty of at least $1,000 or $10 a gallon, whichever is greater. Under IR-2026-122, sellers and highway users of dyed diesel will not face the federal dyed-fuel penalty from 1 October through 31 December; the backup diesel tax itself is still owed unless later deferred or forgiven under forthcoming 7508A guidance. The U.S. Energy Information Administration put the national on-highway diesel average at $6.179 a gallon for the week of 12 October (released 14 October), down 2.0 cents on the week and 35.0 cents from the 21 September peak of $6.529. The federal tax is about 4% of that price.

What the order directs

  • Deferral (s. 2(a)–(b)). Within five days, the Treasury Secretary, “in consultation with the Secretary of War, as appropriate,” must determine whether relief is authorised under 26 U.S.C. 7508A, “including whether a qualifying event has occurred and which taxpayers have been affected.” If so, he must defer payment of taxes under 26 U.S.C. 4041(a)(1)(A) and 4041(b)(1)(B) incurred from 5 October to 31 December 2026, without penalties or interest, to the extent the law allows.
  • Penalty relief (s. 2(c)). Within five days, Treasury must direct the IRS to announce that it will not impose the dyed-fuel penalties in 26 U.S.C. 6715(a)(1) and (a)(2) when dyed diesel is sold for or used on the highway in that period. The announcement must also address penalties for missed semimonthly tax deposits.
  • Guidance (s. 3). Treasury must issue guidance naming the covered taxpayers, the legal basis, the relief periods, and the date by which postponed taxes must be paid.
  • Forgiveness (s. 4). Treasury must “explore avenues, including legislation,” to eliminate the obligation to pay the deferred amounts.
  • Enforcement and supply (ss. 5–8). The IRS must decide how to allocate fuel-tank inspections and sampling during the relief period. The FMCSA must keep enforcing safety rules. USDA must work with co-ops and rural distributors to get dyed diesel to high-demand areas. The White House intergovernmental office must encourage states to adopt matching policies.

How the tax mechanics work

Most highway diesel is taxed under section 4081 when it leaves the terminal: 24.3 cents a gallon, plus 0.1 cent for the Leaking Underground Storage Tank Trust Fund. Section 4041(a)(1) is a backup tax at the same rate. It applies to diesel sold for, or used in, a highway vehicle, but not to fuel already taxed under section 4081. Section 4041(b)(1) exempts fuel for off-highway business use and imposes the tax if that fuel is later used on the road. Read together, the provisions the order names cover untaxed fuel, chiefly dyed diesel, that ends up in highway vehicles. On the statute’s text, the deferral does not change the tax already built into clear diesel at the pump. Section 6715 sets the penalty for knowingly selling or using dyed fuel in a taxable use: the greater of $1,000 or $10 a gallon for each act, rising with repeat violations.

The legal hook: section 7508A

Section 7508A lets Treasury disregard a period of up to one year in deciding whether tax acts were done on time, and in computing interest and penalties. It is available for taxpayers affected by “a federally declared disaster,” “a significant fire,” or “a terroristic or military action.” The IRS newsroom files this kind of relief under “Tax relief in disaster situations.” The order does not say which qualifying event it has in mind. It leaves that determination to the Secretary, “in consultation with the Secretary of War, as appropriate.” Whether a fuel-supply shock fits one of those categories is the first question Treasury’s guidance will have to answer.

What this piece refuses

Do not write that Trump “suspended” or “cut” the federal diesel tax, or that IR-2026-122 forgives the tax. The release waives the dyed-fuel penalty and says 7508A deferral guidance is still coming; the tax is still owed unless later deferred or forgiven. Do not write that pump prices will fall by 24 cents: the deferral targets untaxed dyed fuel, not the tax already collected on clear diesel. Do not treat reports that the president is considering a federal gas-tax suspension as policy; no such order has been verified.

Contested: The order says this “targeted action will put money directly in the pocket of American farmers, truckers, and workers.” Its own text leaves open several questions. Does a supply-price shock qualify under section 7508A? Who carries the deferred liability if Congress does not forgive it? How will dyed-fuel enforcement work while the penalty is waived? The verified record is the order and the statutes it cites.

For Canadian readers: Ottawa’s comparable tool is the federal diesel excise of 4 cents a litre, already suspended to 31 January 2027 and being legislated as Bill C-38. The Conservative motion to scrap all diesel taxes until Canada Day comes to a recorded vote in the House today, after Question Period.

Bottom line

Verified as of 15 October 2026 from IR-2026-122, Executive Order 14435 (91 FR 64747), 26 U.S.C. 4041, 4081, 6715 and 7508A, and the EIA Gasoline and Diesel Fuel Update (week of 12 October): the IRS has waived federal dyed-diesel highway penalties from 1 October through 31 December 2026, with inspections suspended for that window. The 7508A deferral of backup diesel taxes is still described as forthcoming guidance, not as an issued postponement. The federal highway diesel tax on clear diesel at the pump is unchanged. Watch for the 7508A/Form 720 guidance, any forgiveness legislation, and state agency notices.