IRS suspends penalties for certain uses of dyed diesel fuel
October 23, 2026
The IRS recently announced a temporary suspension of federal tax penalties on dyed diesel fuel sold for use or used on highways nationwide.
The move is in response to an executive order signed by President Donald Trump on Oct. 5 that aims to lower costs for diesel users by making dyed diesel more accessible through the end of the year.
The executive order temporarily allows the use of dyed diesel for on-road purposes and defers federal taxes on the fuel with no penalties or interest through the end of the year.
The IRS added that it is aware of concerns regarding residual red dye in fuel tanks after the relief period ends and is considering an appropriate grace period or other mitigation measures, with further guidance to follow. See the IRS news release.
