Trump proposes expanding tax-free red diesel to on-road vehicles

The Trump administration is set to reveal a plan that would expand the permitted use of red-dyed diesel, a fuel that currently enjoys a 24-cent-per-gallon federal excise tax exemption. While the fuel is chemically the same as standard diesel, allowing it in on-road vehicles such as pickup trucks would effectively act as a tax cut for drivers. The measure does not extend to farm equipment, whose operators already benefit from the tax-free status, and it is not expected to boost the total diesel supply, which comes from a national reserve now at a record low.

The announcement comes after a G7 deal to release up to 100 million barrels of emergency oil and diesel stocks, a result of sustained U.S. pressure on European allies. Earlier, Trump had floated a ban on U.S. diesel exports, a proposal that faced opposition from industry groups like the American Petroleum Institute, but he later said foreign sales would not be restricted. The policy rollout coincides with a visit to Grand Island, Nebraska, as the administration courts farm-state voters ahead of the midterm elections.