U.S. President Trump signed a decision at a rally in Nebraska temporarily allowing red-dyed diesel to be used on roads. The measure aims to reduce fuel costs.
Under the decision, payment of the federal excise tax on red diesel used on roads was deferred until the end of the year without interest or penalties. The decision also calls for options to be examined for eliminating the obligation to pay the deferred taxes.
Red diesel use expanded
Red diesel is used in agricultural vehicles, construction equipment and other vehicles operated off public roads. The fuel is identical to regular diesel and is sold tax-free for off-road vehicles and large trucks.
Trump said the off-road-use requirement would be removed and that everyone would be able to purchase red diesel tax-free for any purpose. The fuel is dyed red so law enforcement can determine whether it is being used on public roads.
Tasks assigned to the Transportation and Agriculture departments
Under the decision, the U.S. Department of Transportation will coordinate with states, industry representatives and labor organizations on access to red diesel. The U.S. Department of Agriculture was asked to ensure that farmers can access the fuel in areas where demand is high and to encourage states to take similar steps.
The measure aims to reduce fuel costs for American farmers, truck drivers and workers. It was noted that truck drivers could save more than $100 on each fill-up.
Federal tax stands at 24.4 cents per gallon
The federal diesel tax in the United States is 24.4 cents per gallon. This tax amounts to approximately $60 for a 250-gallon fill-up, while total savings are expected to exceed $100 if states take steps in parallel with the federal measure.
Diesel fuel taxation varies according to its intended use. Diesel used on roads is subject to state and federal excise taxes, while diesel used for off-road purposes such as agriculture and construction is not taxed.
