Illinois farmers can now burn untaxed red-dye diesel in their highway trucks — but the deferred federal and state taxes still total about 98 cents per gallon once the carve-out expires after Jan. 1, 2027.

President Donald Trump signed an executive order Oct. 5, 2026 allowing highway use of tax-free dyed diesel nationwide, contingent on state approval. Illinois Gov. J.B. Pritzker followed the next day with Executive Order 2026-08, legalizing the practice specifically for agricultural use until the orders sunset.

"You're still going to owe the road-use tax on that off-road fuel. You're just allowed to pay it on Jan. 1," said Matt Wells, vice president of the Mid-West Truckers Association.

That deferred tab breaks down to roughly 24.4 cents federal excise tax, 55.8 cents Illinois motor fuel tax, and an 18-cent "backdoor" sales tax Wells said the state will collect. Together, the per-gallon liability approaches one dollar — close to the diesel spread farmers hoped to capture.

What does the executive order actually do?

The federal action defers, rather than eliminates, the diesel tax. Trump left the question of who qualifies to each state. Pritzker's order confines the on-road privilege to agricultural use; it does not extend to general truckers.

"Forgiveness requires congressional action and the president's signature, plus legislative action at the state and the governor's signature," Wells said. "That's the only way."

Until then, off-road dyed diesel still carries a tracking and reporting obligation any time it turns up in an on-road vehicle. Wells warned that the IRS and the Illinois Department of Revenue have not issued a clear process for either farmers or fuel sellers to comply with that requirement.

Who pays, and how much?

Per-gallon deferred tax on red-dye diesel used on Illinois highways:

• Federal excise tax: 24.4 cents
• Illinois motor fuel tax: 55.8 cents
• State "backdoor" sales tax: 18 cents
• Total: 98.2 cents per gallon

Rodney Knittel, associate director of transportation and infrastructure at the Illinois Farm Bureau, said his group is waiting for federal or state guidance on how and when the tax falls due.

"I think it's important that our farmers know that the tax, both the federal and, potentially, depending on what state you're in, it could be due after Jan. 1," Knittel said.

What are the operational risks?

Wells told farmers to think hard before filling a semi with red-dye diesel. A truck pulled over for inspection after Jan. 1 faces unclear penalties — and it can take seven to eight full tanks of on-road fuel to flush the dye from the system.

"At this point, we advise tremendous caution in using off-road diesel for on-road use," Wells said.

Crossing state lines adds another gray zone. Wells said drivers who follow their home-state rules should be fine during the carve-out — but exposure returns once the executive orders expire.

Knittel pressed farmers to map an exit strategy: "What's the exit strategy in terms of getting it clean so that you're compliant once the executive order is done?"

How are farm groups responding?

Bryan Severs, chairman of the Illinois Soybean Growers, thanked Pritzker but kept pressure on regulators.

"Illinois Soybean Growers thanks Gov. Pritzker and his administration for taking the issue of high diesel prices seriously," Severs said. "We look forward to receiving additional guidance on this issue."

Mark Bunselmeyer, president of the Illinois Corn Growers Association and a Maroa, Ill., farmer, drew a sharper line.

"While the answers to both state and federal implementation questions are worked out, Illinois farmers should continue using taxed, on-road diesel in registered highway vehicles to avoid potential penalties that remain unknown," Bunselmeyer said.

Wells offered the bluntest counsel: "Bottom line, unless you really need to, don't do it. It's not worth it."

Because many farms pay bulk-fuel invoices in December or January anyway, Wells added, dyed diesel offers timing relief rather than dollar savings — and the answers from Springfield and Washington have not yet arrived to tell growers what compliance looks like on the other side of Jan. 1.