Dyed Diesel Use Proclamation

Relevant Statutes: Iowa Code sections 452A.2, 452A.3(3)(b), 452A.74, and 452A.74(A).

“Diesel” means any liquid, other than gasoline, which is suitable for use as a fuel in a diesel fuel powered engine, including but not limited to a motor vehicle, equipment as defined in Iowa Code section 322F.1, or a train. Diesel fuel includes a liquid product prepared, advertised, offered for sale, or sold for use as, or commonly and commercially used as, motor fuel for use in an internal combustion engine and ignited by pressure without the presence of an electric spark. Diesel fuel must meet the standards provided in Iowa Code section 214A.2.

“Dyed diesel” means any diesel to which indelible dye has been added to indicate no fuel tax has been paid. “Dyed diesel” includes dyed biodiesel and dyed biodiesel blends.

While the proclamation is in effect (October 5, 2026, through February 4, 2027), all state penalties and taxes are suspended for the sale and use of dyed diesel to transport certain agricultural products on public roads in Iowa. 

Agricultural products that may be transported using dyed diesel are:

• Soybeans, 
• Corn, 
• Hay, 
• Straw, 
• Silage, 
• Stover,
• Distillers grains,
• Soybean meal,
• Livestock,
• Livestock feed,
• Fertilizer (dry, liquid, and gas), 
• Manure (dry and liquid), and 
• Other farm products as described in Iowa Code section 554.9102(1)(am), including:
  • Crops produced on trees, vines, and bushes,
  • Aquatic goods produced in aquacultural operations,
  • Livestock, born or unborn, including aquatic goods produced in aquacultural operations,
  • Supplies used or produced in a farming operation, and
  • Products of crops or livestock in their unmanufactured states.

Public roads on which dyed diesel may be used to transport these products during the proclamation include Interstates, primary roadways, county roads, and local roads in Iowa.

The use of dyed diesel on public roads in Iowa for any purpose other than transporting specified agricultural products remains prohibited. Dyed diesel cannot be used in a personal vehicle on public roads in Iowa, unless that personal vehicle is transporting agricultural products. Dyed diesel cannot be used to transport agricultural products on public roads after the proclamation expires on February 4, 2027, even if dyed diesel was placed in the motor vehicle during the proclamation. 

Any prohibited use of dyed diesel is subject to penalty and tax. Penalties for prohibited use of dyed diesel include criminal and civil penalties under Iowa Code sections 452A.74 and 452A.74A(1).

While the proclamation is in effect (October 5, 2026, through February 4, 2027), tax, penalty, and interest are suspended for dyed diesel used in motor vehicles to transport specified agricultural products on public roads in Iowa. Criminal and civil penalties under Iowa Code sections 452A.74 and 452A.74A(1) will never be imposed for dyed diesel used for this purpose during the proclamation.

After the proclamation expires, users owe use tax on the gallonage of untaxed dyed diesel used to transport specified agricultural products on public roads in Iowa during the proclamation. Users should keep records showing the gallonage of dyed diesel used for this purpose and the purchase price to calculate the amount of tax owed. 

The proclamation does not affect tax, penalty, or interest on clear diesel.

While the proclamation is in effect (October 5, 2026, through February 4, 2027), dyed diesel may be sold free of sales tax for use in motor vehicles to transport certain agricultural products on public roads in Iowa. Sellers should otherwise continue their normal procedures when selling dyed diesel, including collecting sales tax when the sale is not exempt.

While the proclamation is in effect (October 5, 2026, through February 4, 2027), dyed diesel may be purchased free of sales tax for use in motor vehicles to transport certain agricultural products on public roads in Iowa. 

The proclamation does not allow the use of dyed diesel on public roads in Iowa for any purpose other than to transport the agricultural products listed in the proclamation. If dyed diesel is used in the same motor vehicle for exempt and non-exempt purposes, the user owes use tax on the gallonage of dyed diesel used for non-exempt purposes. The  Sales & Use Tax Guide has more information on use tax.

After the proclamation expires on February 4, 2027, users owe 6% use tax on the total gallonage of untaxed dyed diesel used to transport specified agricultural products on public roads in Iowa during the proclamation. Users should retain records—including fuel receipts, invoices, and driving logs—showing the gallonage of dyed diesel used during the proclamation and its purchase price.

Users with a sales and use tax permit may pay use tax on dyed diesel with their regular sales and use tax return. Users without a sales and use tax permit may pay use tax on dyed diesel by logging into GovConnectIowa to file a non-permit return, or by filing an  Iowa Non-Permit Use Tax Return (32-007) (113.45 KB) Archived .pdf . Unlike the per-gallon tax rate on clear diesel, use tax on dyed diesel is 6% of the purchase price. For calculating use tax, users may average the purchase price of all dyed diesel purchased during the proclamation. Users may file one use tax return for all dyed diesel used during the proclamation. The use tax return is due after the proclamation expires on February 4, 2027.

The proclamation only applies to dyed diesel. Users of clear diesel may not claim an exemption or refund of fuel tax to transport agricultural products on Iowa public roads. Users of clear diesel may continue to claim refunds for allowed purposes.  Iowa Fuel Tax Information, Refunds, has information on claiming a refund of fuel tax. 

The proclamation only suspends penalties and taxes imposed by the State of Iowa.

On October 5, 2026, President Donald Trump issued an executive order regarding the taxation of diesel. The federal executive order may apply different conditions on the use and taxation of diesel and dyed diesel fuel. Users of dyed diesel in the State of Iowa must comply with the federal executive order and all other federal laws in addition to Iowa law. For help with federal fuel taxes, call the IRS Excise Tax unit at 866-699-4096.

Other states may have different laws regarding the use and taxation of diesel. An allowable use of dyed diesel in one state may not be allowed in another state. If a motor vehicle using dyed diesel on public roads in Iowa travels into another state, that motor vehicle must comply with the laws of that state.

Report Fraud to report suspected tax fraud, including illegal use of dyed fuel. If you choose to supply your optional contact information to the Iowa Department of Revenue, the Department will keep your contact information confidential and will not use it for any other purpose.