
Dyed Diesel Fuel Use Exemption Update
September 29, 2026 | 
Several states, including our neighbors in Nebraska, have recently issued Executive Orders directed toward providing relief from high diesel fuel prices for farmers. The Office of Nebraska Governor Jim Pillen released the following Executive Order and the Nebraska Department of Revenue followed the Executive Order with answers provided in a Frequently Asked Questions Format. FUELIowa has been in contact with Governor Reynolds staff and we can confirm that Iowa is currently weighing several options to bring targeted relief from fuel prices to farmers in the state of Iowa.
We are grateful for the diligent approach being taken by Governor Reynolds and her team as it relates to any exemptions targeting the use of dyed diesel fuel in on-road engines. They want to ensure a seamless transition that accounts for business concerns and provides direct relief to Iowans. FUELIowa has been able to share with Governor Reynolds team concerns surrounding the collection of sales tax on fuel where excise tax is not charged, storage and supply challenges, future liability concerns from red dye contamination in engines and storage tanks, future tax audits, and the scope of commercial entities covered by any Executive Order relaxing use limitations for dyed diesel fuel.
Noticeably absent from discussions centered on dyed diesel fuel has been a statement from the Internal Revenue Service. The IRS is the federal agency with jurisdiction over dyed diesel fuel and an Executive Order issued by a state Governor relaxing restrictions on dyed diesel fuel use is unprecedented. FUELIowa can confirm that our national association, the Energy Marketers of America, has reached out to the IRS to gain clarity on how they plan to oversee a patchwork of state Executive Orders and proclamations relaxing use limitations on dyed diesel fuel. Our understanding is that those discussions with the IRS are ongoing.
As discussions around fuel price relief options mature, FUELIowa will continue to provide updates to membership through email alerts as well as our social media channels. Members with questions, comments, and concerns are encouraged to contact John Maynes in the FUELIowa office at 515-421-4043 or john@fueliowa.com.





