Federal Diesel Order Brings Relief, but California Farmers Can't Use It Yet
Published Friday, October 9, 2026
Diesel prices remain a top priority for Farm Bureau. Here are the latest developments.
What does the order do? On Oct. 5, President Trump signed an executive order that temporarily allows red-dyed diesel on public highways. It also defers the 24.4-cent federal diesel excise tax on that fuel through Dec. 31, with no interest or penalties. The Treasury Department is directed to explore eliminating the deferred tax, and states are encouraged to adopt matching policies. At least 10 states, including Texas, Oklahoma, North Carolina and Alabama, had already opened roads to dyed diesel.
What does it mean for California? California law still prohibits the use of red-dyed diesel on public highways. As a result, California farmers and ranchers cannot fully benefit from the federal action unless the state also provides relief.
Red-dyed diesel in California is not subject to the federal diesel excise tax when used off-road for farming, and it is exempt from the state's 48-cent diesel excise tax. That exemption is why the fuel is dyed. The tax applies only when diesel is used on the road. Until the state acts, California farmers and ranchers cannot use the federal relief for on-road fuel. Fuel used off-road in tractors and pumps is unchanged.
What it could save. If California suspends its 48-cent diesel excise tax and allows dyed diesel on roads, the combined relief would be about 73 cents per gallon.
100-gallon fill: about $73
10,000 gallons of on-road hauling fuel: about $7,300
Savings would apply to on-road farm trucks and haulers, not equipment already running on dyed diesel. These figures exclude sales tax.
What we're doing. Farm Bureau has met with Senate and Assembly Transportation committees and sent a letter to committee chairs seeking immediate relief. We also joined an agricultural coalition letter urging the governor to issue an executive order.
What members can do. FarmTeam members are encouraged to complete the survey on how diesel prices affect their operations. It follows a request from the Senate Transportation Committee for real-world examples. Results will be shared with policymakers.
Staff contact: Daniella Legostaev dlegostaev@cfbf.com.
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