Arkansas farm and timber operators can now put red-dyed diesel, normally reserved for off-road equipment, into qualifying road vehicles without state penalties. Governor Sarah Huckabee Sanders signed Executive Order 26-15 on September 29, declaring an emergency in all 75 counties and suspending the relevant state taxes and penalties from September 30 through October 30, unless the order is amended or extended. Many can now draw on tanks already on site.
Harvest budgets were drawn up for a very different market. The order notes that the University of Arkansas Cooperative Extension Service built its 2026 crop budgets around diesel at $2.46 per gallon. On-highway diesel averaged $5.955 on the Gulf Coast and $6.382 nationally in the week ending September 28, according to the U.S. Energy Information Administration (EIA). Sanders also points to national distillate inventories 13% below the five-year seasonal average as of September 11. A budget assumption and a retail pump price are not calculated the same way, so the comparison shows the direction of the squeeze more than its precise size.
Arkansas Relief Applies Only to State-Registered Farm and Forestry Vehicles in Classes 2 Through 8
To qualify, a vehicle must fall in Arkansas registration Class 2, 3, 4, 5, 6 or 8, be registered in the state and be owned and operated mainly for an agricultural or forestry business. Vehicles licensed under the International Fuel Tax Agreement are excluded, so most interstate carriers fall outside the order. Qualifying vehicles may also run a mix of dyed and undyed fuel in the same tank.
Farm operations must commercially produce food, fiber, grass sod, nursery products or livestock, backed by tax filings or, for newer businesses, a credible plan. Forestry coverage runs from felling a tree through loading timber in the field. Sawmills, wood products plants and contract haulers further down the chain are not automatically included.
IRS Penalty Relief Would Still Require Highway Diesel Tax to Be Paid
Federal rules are another matter. Sanders directed the Department of Finance and Administration to request dyed-diesel penalty relief from the Internal Revenue Service (IRS) within three business days. As of October 1, the IRS had posted no Arkansas waiver.
A waiver would remove the federal penalty, though not the federal tax. Under the Internal Revenue Manual's relief procedure, operators avoid the penalty only if they or the fuel seller pay the tax normally charged on highway diesel, and the fuel must meet Environmental Protection Agency (EPA) sulfur rules. Without relief, IRS Publication 510 sets the penalty at the greater of $1,000 or $10 per gallon. When the IRS does approve relief, it usually lasts 15 to 30 days.
Arkansas is following Louisiana, where Governor Jeff Landry issued a similar emergency order a week earlier covering farm and forest-products vehicles through October 22. Both windows close before crops stop moving. The Arkansas order itself notes that harvest and delivery often run into November, and forestry work continues all year.
Operators leaning on the order will want their paperwork in place first. An inspector would expect registrations, proof of farm or harvesting income and evidence that the federal highway tax was paid. Diesel costs are also moving downstream into supplier pricing and freight contracts, so buyers of crops and lumber may feel this harvest season in their own invoices.
The order buys four weeks of flexibility at a costly moment. Beyond October 30, operators are weighing fuel alongside other rising costs, including higher prices for new trucks, as they set 2027 budgets. Whether Sanders extends the order into November, when the harvest is still running, is the next decision to watch.
