US States Roll Out Fuel Tax Waivers and Diesel Rule Relief as Pump Prices Surge

US states are rolling out a patchwork of measures to bring down gasoline and diesel prices that have climbed sharply in recent months, driven by supply disruptions linked to the US war on Iran, Ukrainian strikes on Russian refineries and shrinking global inventories. Diesel touched a record $6.53 a gallon a week ago, according to AAA data.

With November's midterm elections approaching and President Donald Trump's economic approval ratings under strain, the White House and Republican candidates in tight races are searching for ways to lower diesel costs without disrupting supplies or adding costs elsewhere. The administration is weighing regulatory relief to permit broader sales of red-dyed diesel, which is normally reserved for off-road uses such as farming and is exempt from most federal fuel taxes, a step that could let some buyers avoid the federal fuel levy. Trump has also said he backs a ban on diesel exports.

Several states have already moved.

Alabama said last week it would halt enforcement of restrictions on red-dyed diesel use for 120 days. Oklahoma's governor paused enforcement of all taxes, regulations and fines on red-dyed diesel in farm and highway vehicles for the same period. Louisiana will allow farmers and timber harvesters to use dyed diesel in highway vehicles, while Nebraska permitted highway-registered vehicles to use untaxed dyed diesel without state fines or penalties. Texas' governor said he would expand dyed diesel use on state roads.

On taxes, Georgia suspended its state gasoline and diesel tax for 30 days and lifted weight restrictions on commercial vehicles to cut transport costs. Indiana suspended its sales tax on gasoline. Kentucky's governor signed an executive order in May cutting the gasoline tax by 10 cents, freezing gasoline tax increases and any rise in motor vehicle property tax in 2027. Illinois' governor paused a 1.3-cent gasoline tax increase for six months this summer. Massachusetts' governor plans legislation to suspend the state's 24-cent-per-gallon gasoline and diesel tax for two months from seven days after passage, with retailers required to pass the cut on at the pump and station owners protected from losses.

Other steps target fuel blends and transport rules. California suspended its seasonal summer-blend gasoline requirement for the rest of the season and directed agencies to allow winter-blend gasoline to be made, imported, distributed and sold immediately. Michigan's governor temporarily waived an environmental rule so regional stations can sell cheaper higher-vapor winter blends and E15 through the summer. Montana waived certain hours-of-service rules for intrastate gasoline and diesel haulers. South Dakota allowed farmers and haulers moving crops, livestock and other agricultural commodities at up to 10% above standard highway weight limits and temporarily waived the $25 overweight trip permit fee, while directing its revenue department to monitor fuel supplies and assess whether a tax refund to suppliers is warranted if regular diesel must be used in farm machinery because of possible dyed diesel shortages. Nebraska's governor also said diesel taxes paid while transporting the state's seasonally produced products and livestock on state roads are eligible for refunds, and eased weight limits for seasonal crop transport. Texas raised allowable weights for fuel, agricultural and timber hauling and suspended low-emission diesel fuel regulations.