Michigan farm and logging operators can now run red-dyed diesel, the untaxed fuel normally reserved for off-road equipment, in qualifying highway vehicles. Governor Gretchen Whitmer declared a statewide energy emergency in Executive Order 2026-15 on October 12, citing record diesel prices and oil market disruption tied to the war in Iran. The order took effect immediately and runs until the governor ends the emergency, or December 31 at the latest.
Michigan is one of several states acting after a federal executive order signed October 5, which asked federal agencies to encourage matching state policies. The two layers work differently, and operators need both straight before changing how they fuel.
The Plate Decides Who Qualifies
Michigan suspended two sections of its Motor Fuel Tax Act. One bars using dyed diesel for taxable purposes, and the other keeps vehicles with farm or wood harvester plates off public roads when dyed fuel is in the tank. The suspensions apply only to vehicles carrying an unexpired farm or wood harvester plate, and only to dyed diesel. A conventionally registered truck hauling grain under contract does not qualify simply because the farm it serves does.
Nor is the order a state tax holiday. It says plainly that it does not waive or change taxes, penalties or other obligations under the act beyond the suspended sections, and it sets no recordkeeping rules. Illinois drew its line differently. Its Executive Order 2026-08 suspends penalties for on-road agricultural use from October 6 through December 31 and asks users to keep four years of records covering plates, gallons, fill dates and proof of agricultural use.
Federal Relief Is a Deferral
The federal order directs the Treasury Department to decide whether it can defer certain federal diesel excise taxes incurred from October 5 through December 31, free of penalties and interest, and to issue guidance naming who qualifies and when the deferred tax comes due. It separately tells the Internal Revenue Service (IRS) not to impose penalties for highway use of dyed diesel over the same period. Treasury is also asked to explore ways, including legislation, to eliminate the deferred amounts. Exploring forgiveness is not the same as granting it, so finance teams have no basis for booking a federal saving until guidance sets eligibility and a payment date.
Plan the Exit Before December
Shared farm tanks may now feed both field equipment and road hauling, which drains them faster. The U.S. Energy Information Administration (EIA) expects national distillate inventories to stay below their 2021 to 2025 average throughout its forecast, so refill lead times and delivered prices are worth confirming with suppliers now. Fuel costs are already feeding uneven cost pass-through between suppliers and buyers, and shippers are seeing more fuel exposure written into freight contracts.
Going back to normal rules takes planning as well. Illinois tax officials warn that dye can linger in a tank for months, and they advise keeping an odometer reading from the last day of relief along with receipts for clear diesel bought afterward. Michigan operators may want the same paper trail in case their emergency ends before December 31. Temporary fuel access will not settle the longer-term fleet replacement decisions many operators face heading into 2027, but it can ease the next few weeks if the records hold up.
