Trump and State Governors Waive Diesel Taxes Amid Iran Conflict

President Donald Trump signed a nationwide executive order waiving the off-road requirement for red dyed diesel fuel, allowing any user to purchase the tax-exempt fuel for any reason through December 31, 2026. Trump stated the measure would lower grocery prices and save truckers over $100 per fill-up. The order comes as fuel prices face pressure from an ongoing war in Iran and the blockage of oil in the Strait of Hormuz.

Following the federal action, Governor Andy Beshear declared a state of emergency in Kentucky to allow farmers and truckers to use untaxed or dyed diesel on public roadways. Beshear attributed the rising costs to Trump's tariffs and the conflict with Iran. In a separate effort to provide relief, Beshear froze Kentucky's gasoline tax at 26.4 cents per gallon in May, preventing a scheduled increase.

Similarly, Governor J.B. Pritzker issued a disaster declaration in Illinois, removing penalties for the on-road use of dyed diesel for farming and farm-related travel. Pritzker also cited the administration's conflict with Iran as the cause of the fuel crisis.

Despite the immediate price relief, officials warned that the measures do not eliminate tax liability. Rodney Knittel, Associate Director of Transportation and Infrastructure, noted that the relief may be a deferment rather than forgiveness, meaning users could face tax bills after the orders expire.