North Dakota Expands Use of Dyed Diesel for Farmers

Governor Kelly Armstrong signed an order allowing tax-advantaged fuel use for agricultural transport on public roads.

Updated on Oct. 21, 2026 in Agriculture

Isometric editorial illustration of a fuel storage tank in an agricultural field, depicting North Dakota's regulatory shift regarding fuel use. — Governor Kelly Armstrong authorized North Dakota farmers to use tax-advantaged red-dyed diesel fuel on public highways to lower rising operational costs. AI Illustration. Upload story photo >

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Is the current economic environment in your area becoming too expensive for local farmers to survive?

In September 2026, Governor Kelly Armstrong authorized North Dakota agricultural producers to use red-dyed diesel in vehicles on public highways. This relief measure is intended to help farmers manage rising input costs.

Why it matters

The measure provides significant cost relief for producers facing an average diesel price of $6.07 per gallon, which is $2.60 higher than one year ago. High operational expenses have raised concerns about the financial viability of highly leveraged farms through 2027.

Regular highway diesel is taxed at $0.23 per gallon, while red-dyed diesel incurs a lower tax rate of $0.04 per gallon. This price disparity offers essential savings for farmers hauling grain, livestock, and supplies.

The players

Kelly Armstrong

He is the Governor of North Dakota who authorized the temporary expansion of red-dyed diesel use on public roads.

President Donald Trump

He is the current President of the United States who signed the federal executive order suspending penalties for using dyed diesel on highways.

The details

The state order permits the use of dyed fuel in licensed farm vehicles on public roads to alleviate unsustainable input costs for the agricultural sector. Furthermore, an executive order signed by President Trump on October 5, 2026, suspends federal penalties for the highway use of dyed fuel for the remainder of the year.

Governor Kelly Armstrong signed the expansion order in September 2026.
President Trump signed the federal executive order on October 5, 2026.
The North Dakota state authorization for road use expires November 30, 2026.
The federal suspension of penalties for dyed diesel ends December 31, 2026.
Highly leveraged agricultural producers face a critical financial survival period throughout 2027.

Market Landscape

This policy follows a pattern set by previous agricultural support programs by utilizing targeted tax relief to stabilize the industry. The move positions the state to mitigate economic strain on farmers amid broader inflationary pressures in the agricultural input market.

Agricultural producers in North Dakota can immediately utilize red-dyed diesel in licensed vehicles on public roads to reduce fueling costs. Farmers should plan for these temporary state and federal tax concessions to expire by the end of 2026.

The takeaway

Farmers should track fuel expenditure savings closely to plan for the potential return of standard highway diesel taxes in 2027. Careful financial planning is recommended for producers given the ongoing volatility in agricultural input costs.