RALEIGH – Gov. Josh Stein directed North Carolina tax officials to suspend state penalties for highway use of dyed diesel fuel through the end of 2026, offering temporary relief intended to help farmers during harvest season.
Stein announced the directive Wednesday as diesel prices remained elevated and fuel supplies tight. The action directs Department of Revenue Secretary McKinley Wooten to provide relief from state penalties tied to on-road use of red-dyed diesel. Stein separately asked the Internal Revenue Service to provide federal penalty relief.
The state directive does not itself change federal law. Highway users could remain subject to federal restrictions unless the IRS grants relief.
Dyed diesel is chemically the same fuel used in highway vehicles, but red dye marks it as exempt from state and federal motor-fuel excise taxes. It is normally sold for off-road equipment, including farm machinery. North Carolina Department of Revenue guidance says sales tax still applies.
State law ordinarily bars the use of dyed or other non-taxpaid fuel on public highways. A violation can be a Class 1 misdemeanor and can carry a civil penalty equal to the greater of $1,000 or five times the motor-fuel tax due.
Stein said the temporary relief is intended to reduce costs for farmers and protect the state’s food supply. The governor’s office did not announce a change to the underlying tax rate or identify a new source of diesel supply.
Reuters reported Wednesday that allowing on-road use of dyed diesel can reduce taxes paid by eligible users, but analysts said the policy does not create more fuel or reduce wholesale diesel prices. That distinction means any savings would come from temporary tax and penalty treatment rather than a broader increase in supply.
The state relief is scheduled to remain in place through Dec. 31. The governor’s office said the Department of Revenue would provide additional guidance on implementation.
Sources
- Office of Gov. Josh Stein, Sept. 30
- North Carolina General Statutes, G.S. 105-449.117
- Reuters, Sept. 30
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Editor’s Note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.