10/08/2026
Update on use of dyed diesel for highway use…
On Oct. 5, 2026, President Trump’s signed an Executive Order deferring federal diesel fuel tax payment obligations to provide penalty relief to the extent permitted by law. No penalty will be imposed on dyed diesel fuel that is sold for use or used on the highway during the period of October 5, 2026, through December 31, 2026. The order also directs federal agencies to coordinate with states regarding potential waivers of taxes on road diesel.
On Oct. 6, 2026, Governor Pritzker directed the Illinois Department of Revenue and Illinois State Police not to impose penalties when dyed diesel from bulk storage is sold or used on Illinois highways and state roads for farming and agricultural purposes through Dec. 31, 2026. He also directed IDOR to issue guidance on implementation and recordkeeping.
As of Oct. 7, 2026, both federal and state taxes are DEFERRED, NOT WAIVED, and users could be subject to the tax at a later date. It would require an act of Congress (for federal taxes) and/or the Illinois General Assembly (for Illinois taxes) to waive or forgive the deferred taxes. Farmers should not assume the deferred tax will never become due.
** KEEP RECORDS **
Governor Pritzker explicitly directed IDOR to explain what records farmers should maintain. Until then, farmers should retain detailed fuel purchase invoices/receipts and records showing the amount, date, vehicle/equipment and agricultural purpose of the fuel used. Illinois already requires records documenting fuel purchases and use.
AFTER JANUARY 1ST
IFB maintains concerns about how enforcement will be handled beginning January 1, 2027. It is unclear how enforcement will address the practical challenges associated with the physical characteristics of dyed diesel and any residual fuel that may remain in vehicle fuel systems when the temporary authorization expires. Growmark fuel experts estimate it can take running 7 to 8 tanks of clear highway diesel to remove all residual red-dye, and members should plan accordingly.
Please post your questions in the comments below. We will keep our members updated as more details become available.