Michigan Suspended Dyed Diesel Road Restrictions
Agricultural and forestry operators can now use tax-free fuel on public roads to mitigate rising diesel costs.
Updated on Oct. 13, 2026 in Agriculture
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Governor Gretchen Whitmer declared a statewide energy emergency to suspend regulations prohibiting the use of tax-free dyed diesel on public roads. This measure aims to reduce operational expenses for Michigan farmers and forestry businesses through the end of 2026.
Why it matters
Rising fuel costs have created significant margin pressure, with diesel prices climbing by $3 over the last year. By allowing the use of dyed diesel, which typically costs $1 less per gallon, the state seeks to ease the economic burden on agricultural producers.
The average price for a gallon of diesel in Michigan is $6.48, compared to dyed diesel which typically costs $1 less per gallon. This emergency policy remains in effect through December 31, 2026.
The players
Gretchen Whitmer
The Governor of Michigan who issued the energy emergency declaration.
Donald Trump
The President of the United States who ordered the unrestricted use of tax-free red dye diesel on roads.
Michigan Farmers Union
A labor and advocacy organization representing agricultural producers that hosted an economic panel in Ithaca.
The details
The state order lifts restrictions on using untaxed red dye diesel on public roadways for farm and forestry equipment. Businesses can utilize this fuel for necessary transport, avoiding the standard motor fuel tax to lower their total energy expenditures. This administrative adjustment follows reports of high operational costs, such as individual facility repairs reaching $43,000, compounding the impact of elevated fuel prices.
Timeline
Friday, October 9, 2026: Farmers held an economic panel at Kellogg Farms.
October 12, 2026: The average price for a gallon of diesel reached $6.48.
December 31, 2026: The state of energy emergency declaration expires.
Market Landscape
This emergency order provides a temporary state-level bypass of the federal prohibition on tax-free red dye diesel use on public roads. The move represents a departure from standard fuel tax compliance as the state attempts to counter rising agricultural overhead.
Operators in the farm and forestry sectors should calculate potential fuel savings while ensuring they maintain internal records of diesel usage for potential future audits. Consult with your tax professional to confirm how this state-level suspension interacts with your specific federal fuel tax filing obligations.
The takeaway
This policy offers immediate relief on fuel expenditures, which have increased by $3 per gallon over the last year. Review your fuel procurement strategy and monitor your state tax filings to confirm your business remains compliant with the evolving guidelines through the end of 2026.
What happens next
The emergency declaration is set to expire on December 31, 2026.
Further reading
For more information on state policy changes, see the Agriculture section.
Source note: This article includes information reported by WEYI.
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