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Trump Order Gives Treasury 5 Days To Decide On Deferring Diesel Excise Tax Through December

The executive order sets no relief itself; Treasury must first decide whether it has authority, and the White House cites restricted global diesel supply.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Trump Order Gives Treasury 5 Days To Decide On Deferring Diesel Excise Tax Through December

President Trump signed an executive order on Monday telling the Treasury Secretary to decide within 5 days whether he can defer federal diesel excise taxes and waive penalties for driving on highways with untaxed dyed diesel. The order creates no relief by itself: Treasury has to make the legal determination first and then issue guidance.

What the order directs

The order asks Treasury, in consultation with the Secretary of War as appropriate, to determine whether relief is authorized under a tax-code provision that allows deadline postponements after a qualifying event. That includes deciding whether such an event occurred and which taxpayers it affected.

If the Secretary finds relief is authorized, he is to defer payment of the diesel excise taxes under two named sections of the tax code that are incurred from October 5, 2026, through December 31, 2026. The deferral is to carry no penalties, interest or additional amounts, to the extent the law allows.

Separately, the Secretary must direct the Internal Revenue Service to announce within 5 days that it will not impose penalties when dyed diesel is sold for highway use, or used on the highway, during the same period. That announcement is also to address relief from penalties for missed semimonthly deposits of the tax.

Treasury must then issue guidance naming the relief, its conditions, covered taxpayers, relief periods and the date deferred taxes come due. The order also tells the Secretary to explore ways, including legislation, to eliminate the obligation to pay the deferred amounts, and to assess how the IRS should use inspection and fuel-sampling resources during any relief period.

Who else has a job

The Transportation Secretary, acting through the Federal Motor Carrier Safety Administration, is to work with states, industry and labor groups. The order says the agency must continue audits, inspections and monitoring as the law provides.

The Agriculture Secretary is to work with cooperatives, rural fuel distributors and farm supply groups on dyed diesel distribution in high-demand areas, and to encourage matching state action. The director of the White House Office of Intergovernmental Affairs is to urge states to adopt corresponding policies.

The order states that it creates no enforceable rights and is subject to available appropriations.

The White House's case and the price backdrop

The order says restricted global diesel supply has pushed up prices and hit farmers and truckers hard. A White House fact sheet attributes the supply squeeze to the Russia-Ukraine war and a lack of refining capacity, and says the action would save truckers over $100 per refill. It explains that dyed off-road diesel is exempt from the 24.4-cent federal tax per gallon, and that governors can also halt inspections and waive state liability.

Those are the administration's claims. Axios reported the national average hit an all-time high of $6.53 on September 22 and stood at $6.32 on Monday, per AAA. Axios also reported that about 10 states had already suspended penalties for red diesel on highways to help farmers during harvest.

Newsweek reported that Trump had floated a diesel export ban and ruled it out last week after European countries agreed to release reserves. The fact sheet says Europe agreed to release 100 million barrels of refined diesel from strategic reserves within four months.

Treasury's determination and the IRS announcement are both due within 5 days of the order, with implementing guidance, including the date deferred taxes must be paid, to follow.

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