Off-road diesel: dyed (red) diesel rules, tax savings and prices by state
Off-road diesel is ordinary ultra-low sulfur diesel with red dye added at the terminal to show that highway fuel taxes have not been paid. It is meant for tractors, construction equipment, generators, boats and furnaces, never for vehicles on public roads. Below: who can use it, what it saves in your state, what it costs now, the penalties, and the emergency waivers in force this autumn. Rules checked 25 October 2026.
The IRS will not impose federal penalties for selling or using dyed diesel on highways, nationwide, and has suspended its usual enforcement and record-keeping requirements for it. This covers federal penalties only; state fuel taxes and state penalties still apply unless your state says otherwise.
IRS news release IR-2026-122 (14 October 2026), following the Executive Order of 5 October 2026, Emergency Tax Relief on Diesel Fuel. IRS release. 22 states have also issued their own temporary orders; see the table below.
Who can use dyed diesel
Federal law taxes diesel only when it is used in a highway vehicle or a train, so almost every other use is allowed. IRS Publication 510 lists the nontaxable uses, including:
- Farming: tractors, combines and other farm equipment used on a farm for farming.
- Off-highway business use: generators, compressors, forklifts, bulldozers, power saws and other equipment not registered for the road.
- Boats: commercial fishing boats and, under the general nontaxable-use rule, other boats including pleasure boats.
- Home heating, lighting and cooking, stationary machines, minibikes and snowmobiles.
- School buses, qualified local buses, state and local government, nonprofit educational organisations and exports.
It may never fuel a car, pickup, motorhome or truck driven on a public road (except the listed buses and government vehicles). States can be stricter about where it may be used and sold; each state's rules are on its state page.
Dyed diesel tax by state
"Tax skipped" is the federal 24.3c plus the state's per-gallon diesel taxes and fees, minus any per-gallon charges dyed diesel still pays. Where a state charges sales tax on dyed diesel instead, part of that saving goes back. States that tax dyed diesel their own way show no single figure; their state page explains how it works.
| State | State fuel tax on dyed | Tax skipped (c/gal) | Sales tax on dyed | Temporary order |
|---|---|---|---|---|
| Alabama | Exempt off-highway only | 54.05c | Yes, unless exempt | Until 22 January 2027 |
| Alaska | Partly taxed | see state | Yes, unless exempt | |
| Arizona | Exempt | 50.3c | Yes, unless exempt | Until 31 December 2026 |
| Arkansas | Partly taxed | see state | No | Until 30 October 2026 |
| California | Exempt | 72.5c | Yes, unless exempt | |
| Colorado | Exempt | 57.8c | No | |
| Connecticut | Partly taxed | see state | Yes, unless exempt | |
| Delaware | Exempt off-highway only | 46.3c | None | |
| District of Columbia | Unclear | see state | Yes, unless exempt | |
| Florida | Exempt | 63.2c | Yes, unless exempt | |
| Georgia | Exempt | 61.6c* | Yes, unless exempt | Until 5 November 2026 |
| Hawaii | Partly taxed | see state | Yes, unless exempt | |
| Idaho | Exempt | 56.3c | Yes, unless exempt | Until 8 November 2026 |
| Illinois | Exempt | 80.1c | Yes, unless exempt | Until 31 December 2026 |
| Indiana | Exempt | 88.3c | No | Until the emergency ends |
| Iowa | Exempt | 56.8c | Yes, unless exempt | Until 4 February 2027 |
| Kansas | Exempt | 50.26c | Yes, unless exempt | |
| Kentucky | Partly taxed | see state | Yes, unless exempt | Until 31 December 2026 |
| Louisiana | Exempt | 44.17c | Yes, unless exempt | |
| Maine | Exempt | 55.5c | Yes, unless exempt | |
| Maryland | Exempt | 71.75c | Yes, unless exempt | Until 31 December 2026 |
| Massachusetts | Exempt by use | 48.3c | Yes, unless exempt | |
| Michigan | Exempt | 77.7c | No | Until 31 December 2026 |
| Minnesota | Exempt | 56.8c | Yes, unless exempt | |
| Mississippi | Partly taxed | see state | No | |
| Missouri | Exempt | 53.41c | Yes, unless exempt | Until 31 December 2026 |
| Montana | Exempt | 54.05c | None | Until 23 November 2026 |
| Nebraska | Partly taxed | see state | Yes, unless exempt | Until 23 December 2026 |
| Nevada | Exempt | 51.3c | Yes, unless exempt | Until 31 December 2026 |
| New Hampshire | Exempt | 46.5c | None | |
| New Jersey | Exempt | 80.4c | Yes, unless exempt | |
| New Mexico | Unclear | see state | Yes, unless exempt | |
| New York | Partly taxed | see state | Yes, unless exempt | |
| North Carolina | Exempt | 65.3c* | Yes, unless exempt | Until 31 December 2026 |
| North Dakota | Partly taxed | see state | Yes, unless exempt | Until 30 November 2026 |
| Ohio | Unclear | see state | Yes, unless exempt | |
| Oklahoma | Exempt | 44.3c | Yes, unless exempt | Until 2 February 2027 |
| Oregon | Exempt by use | 64.3c | None | |
| Pennsylvania | Exempt | 99.5c | Yes, unless exempt | |
| Rhode Island | Unclear | see state | Yes, unless exempt | |
| South Carolina | Exempt | 52.3c | Yes, unless exempt | |
| South Dakota | Exempt | 52.3c | Yes, unless exempt | Until 31 December 2026 |
| Tennessee | Exempt | 51.3c | Yes, unless exempt | Until 31 October 2026 |
| Texas | Exempt | 44.3c | No | Until the emergency ends |
| Utah | Exempt | 62.2c | Yes, unless exempt | |
| Vermont | Exempt | 56.3c | Yes, unless exempt | |
| Virginia | Exempt | 58.1c | Yes, unless exempt | Until 31 December 2026 |
| Washington | Exempt | 83.8c | Yes, unless exempt | |
| West Virginia | Partly taxed | see state | Yes, unless exempt | |
| Wisconsin | Exempt | 55.2c | Yes, unless exempt | |
| Wyoming | Exempt | 47.3c | Yes, unless exempt |
Checked 25 October 2026 against each state's revenue department, statutes and official orders; sources are on each state page. Local sales taxes are not shown. * Normal rates: this state's tax on clear diesel is temporarily cut this autumn, so the gap is smaller until it returns. A summary, not legal or tax advice.
Temporary state orders, autumn 2026
After the federal executive order of 5 October 2026, several states suspended their own dyed-diesel bans or penalties, mostly for farm and timber hauling during harvest. Each order has its own limits; read the state's order before relying on it.
What off-road diesel costs
There is no federal survey of retail dyed diesel prices: EIA stopped publishing its prices to end users by sales type in 2022. The best current public figures are USDA's farm diesel prices, quoted by fuel distributors every two weeks.
| USDA report | Average | Range | Basis |
|---|---|---|---|
| Iowa | $5.49 | $5.40 to $5.56 | F.O.B. |
| Illinois | $5.76 | $5.39 to $6.01 | F.O.B. |
| Pacific Northwest | $5.98 | $5.73 to $6.36 | delivered |
USDA AMS production cost reports, No. 2 diesel (farm), week ending 16 October 2026. The reports do not say whether the prices include taxes. For on-road prices by state, see diesel prices by state.
Penalties and inspections
The federal penalty for dyed diesel in a highway vehicle is the greater of $1,000 or $10 a gallon, with the $1,000 multiplied for each prior penalty, on top of the tax, with no reasonable-cause exception. IRS inspectors work at weigh stations, agricultural inspection stations and marked roadside sites with police present: they check the tank with a pipette and send a sample to a lab if they see dye. Many states run their own checks and set their own penalties, from civil fines to criminal charges; each state page lists them. Federal penalties for highway use are waived from 1 October 2026 to 31 December 2026.
Where to buy it
There is no federal permit to buy dyed diesel. It is sold mostly by farm co-ops, bulk fuel distributors who deliver to your own tank, marinas and cardlock sites, and at some truck stops with separate dyed pumps. Any pump selling it must carry the notice "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE". Some states add rules: a certificate for a sales tax exemption, separate marked pumps, or dispensers that cannot reach a vehicle's tank. This site has no live map of sellers; your state page lists what that state requires.
What it is
Dyed diesel is the same No. 2 diesel as clear road diesel. Under EPA rules phased in by the mid-2010s, nearly all diesel for engines, on-road or off, must be ultra-low sulfur (15 ppm). The red colour comes from Solvent Red 164, which federal rules require at a set concentration so inspectors can spot untaxed fuel. Dyed fuel still pays the 0.1c a gallon federal leaking-tank tax; it skips the other 24.3c.
Questions
Can I put red diesel in my pickup truck?
Not on public roads. Federally, dyed diesel may not be used to propel any highway vehicle, and the normal federal penalty is the greater of $1,000 or $10 a gallon, with the $1,000 multiplied for each prior penalty. From 1 October 2026 to 31 December 2026 the IRS is not imposing that federal penalty (IR-2026-122), but your state's own ban and penalties still apply unless your state has issued its own order; several have, mostly for farm and timber hauling. Off the road, on a farm or private land, a pickup is not a highway vehicle use.
Can I use dyed diesel in a boat or a home generator?
Federally, yes. IRS Publication 510 lists use in boats, stationary machines such as generators and compressors, home heating, lighting and cooking, and minibikes and snowmobiles as nontaxable uses. Some states are stricter: Illinois bans dyed diesel in recreational boats, and Connecticut's tax exemption for boat fuel runs through licensed marine fuel docks.
Is off-road diesel cheaper?
Usually, by the taxes it skips: the federal 24.3 cents a gallon, plus most of the state's per-gallon fuel tax. In many states it pays sales tax instead, which takes back part of that saving. For the week ending 16 October 2026, USDA reported farm No. 2 diesel averaging $5.49 in Iowa, $5.76 in Illinois and $5.98 in the Pacific Northwest, against a US on-highway average of $6.35 (EIA, week of October 26, 2026).
Is red diesel the same as heating oil?
Close, but not always. No. 2 heating oil is usually dyed and is a nontaxable use, and the IRS treats home heating as an exempt use. But EPA rules require any fuel used in a diesel engine to be ultra-low sulfur (15 ppm), and some heating oil is higher sulfur, so heating oil should not go into a tractor or engine unless the seller confirms it meets the diesel standard.
Can I buy dyed diesel at a gas station?
Sometimes. There is no federal permit to buy it, and any pump selling it must carry the notice "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE". Most dyed diesel is sold by farm co-ops, bulk fuel distributors who deliver to your tank, marinas and cardlock sites rather than ordinary gas stations, and some states restrict retail dyed pumps (Illinois requires dyed dispensers that cannot reach a vehicle's tank). This site does not have a live map of dyed diesel sellers.
What happens if I get caught with dyed diesel in my truck?
Inspectors check fuel tanks at weigh stations and roadside sites, look for red dye with a pipette, and send samples to a lab. The federal penalty is the greater of $1,000 or $10 a gallon, with the $1,000 multiplied for each prior penalty, with no reasonable-cause exception (waived by the IRS for highway use from 1 October 2026 to 31 December 2026). States add their own: from a $200 civil penalty in Indiana to a Class D crime with a $1,000 minimum fine in Maine felony charges in Kansas, and felony charges for repeat offences in Illinois.
Sources: IRS Publication 510 (revised December 2025); Internal Revenue Code sections 4081, 4082 and 6715; 26 CFR 48.4082-1 and 48.4082-2; 40 CFR 1090.305; IRS IR-2026-122; USDA AMS production cost reports; EIA weekly retail diesel prices; state revenue departments, statutes and orders as cited on each state page. Checked 25 October 2026. A summary, not legal or tax advice.