09 Oct Dyed Diesel on Public Roads: Important Information for Kansas Agribusiness
Member Update
Dyed Diesel on Kansas Roads: What Members Need to Know
Recent federal action has temporarily changed the rules and potential penalties surrounding dyed diesel fuel used on public roads. Members should understand what the federal order does, what it does not resolve and how Kansas is responding.
Important Caution
Because key details remain unresolved, members should carefully weigh the risks before making any changes to fueling practices.
Federal Action
On Oct. 5, the president issued an executive order directing the Internal Revenue Service not to impose certain federal penalties when dyed diesel is sold for highway use or used on highways from Oct. 5 through Dec. 31, 2026.
The order also directs the Treasury secretary to determine whether federal law allows qualifying taxpayers to defer certain diesel fuel excise tax payments incurred during the same period. Any deferral depends on the secretary’s determination and applicable legal authority. The order does not itself forgive the taxes, and details about eligibility and payment obligations remain important.
Read the federal executive order →
Kansas’ Position
Following requests from Kansas agricultural groups for similar state-level relief, the Governor’s Office informed the associations Gov. Laura Kelly had declined to issue a comparable order.
The federal order does not announce Kansas state-level relief. Members should not assume the federal action eliminates state tax obligations or state-level penalties in Kansas.
What About Other States?
Iowa and Nebraska have also taken state-level action related to dyed diesel use on public roads. The scope and eligibility requirements differ by state, and those actions do not change Kansas requirements.
What Members Should Keep in Mind
- Federal penalty relief is not the same as a waiver of fuel taxes. Any tax deferral depends on further federal determinations and guidance.
- Kansas has not announced comparable state-level relief, according to information provided to the associations by the Governor’s Office.
- The federal order does not resolve every question about who may qualify, how deferred taxes will be handled or what documentation may be required.
- Fuel quality requirements remain in effect. On-road diesel engines generally require ultra-low sulfur diesel fuel (15 ppm sulfur).
KGFA is monitoring developments closely, coordinating with other agricultural stakeholders and will share additional guidance as it becomes available.
This update is provided for informational purposes only and is not legal or tax advice. Members should consult their legal or tax advisers regarding their specific circumstances.