Farmers using red-dyed diesel on the road should understand that the recently announced tax relief is a deferral, not necessarily a permanent tax break. Mike Steenhoek (STEEN-hook), executive director of the Soy Transportation Coalition, says President Trump’s executive order directs Treasury to defer certain federal diesel tax obligations for qualifying fuel used between October 5 and December 31, without penalties or interest. The order also directs officials to explore ways to eliminate the deferred tax obligation. For farmers, the savings depend on purchasing additional dyed diesel during the relief period. Previous purchases of taxed diesel would not qualify. Consider a farmer who purchases 2,000 gallons of red-dyed diesel for both on-road and off-road needs. Using the federal diesel tax rate of 24.4 cents per gallon, that would defer about $488 in federal taxes. State taxes vary, and farmers would need to follow their state’s rules. The American Soybean Association and state soybean groups are urging federal and state officials to ultimately waive the deferred taxes, rather than require farmers to pay them later.
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