‼️ Associations urge immediate action to ease diesel costs while protecting highway funding and providing motor carriers with clear guidance on red-dyed diesel.

HARRISBURG, PA — The Pennsylvania Motor Truck Association (PMTA) and the Pennsylvania Bus Association (PBA) are calling for immediate, temporary relief from high diesel fuel costs through two measures: a short-term suspension of Pennsylvania’s diesel fuel tax and a temporary suspension of the Commonwealth’s 2% biodiesel blending requirement.

The associations are urging the General Assembly to enact a diesel tax holiday that provides meaningful relief to motor carriers while fully protecting transportation funding. They are also calling on the Shapiro administration to exercise its existing authority to temporarily suspend the biodiesel blending mandate, giving fuel suppliers greater flexibility to manage costs and availability.

Pennsylvania's 2026 diesel tax rate of 74.1 cents per gallon is among the highest in the nation. For trucking companies, particularly small fleets, independent owner-operators, and family-owned businesses, diesel is one of the largest and most volatile operating expenses.

For a single-truck owner-operator driving 100,000 miles annually and averaging 6.5 miles per gallon, Pennsylvania's diesel tax represents approximately $950 per month in fuel taxes. A 60-day tax holiday could provide roughly $1,900 in relief for that one truck alone, assuming the full savings are realized and the fuel use is subject to Pennsylvania tax.

“For small trucking companies, diesel is one of their biggest expenses, and when prices spike, they feel it immediately," said Rebecca Oyler, PMTA's President & CEO. 

"Many can't simply pass those increases along to their customers. Eventually, higher transportation costs work their way through the supply chain and affect the prices we all pay for everyday goods. A temporary diesel tax holiday would provide some much-needed relief for trucking companies while helping to ease cost pressures throughout Pennsylvania's economy.”

The impact of high diesel costs extends beyond trucking. Pennsylvania's motorcoach industry faces many of the same pressures, with rising fuel expenses affecting operators that provide essential passenger transportation services throughout the Commonwealth.

“Pennsylvania's high Liquid Fuels Tax rate creates an exceptional burden on operators during price spikes. Private motorcoach fleets carry daily commuters to work, transport students and collegiate athletic teams, move military personnel, and serve as the economic driver for Pennsylvania’s vital tourism destinations—from Hershey and Gettysburg to Lancaster, the Poconos, Philadelphia, and Pittsburgh,” said Patricia Cowley, Executive Director of the Pennsylvania Bus Association.

The associations are also monitoring legislation that would give motor carriers the option to use red-dyed diesel in Pennsylvania under temporary federal relief provisions. While they recognize the value of providing carriers with additional options, they caution that using red-dyed diesel carries significant tax, compliance, and operational considerations that could limit its practical benefits.

Making Sure Tax Relief Reaches Trucking Companies

PMTA and PBA emphasize that the effectiveness of a diesel tax holiday depends not only on the amount of the reduction, but also on how it is implemented.

Pennsylvania's fuel-tax structure includes the Oil Company Franchise Tax (OCFT), collected through fuel distributors, and the Motor Carriers Road Tax (MCRT), which applies to qualifying commercial vehicles. Under the International Fuel Tax Agreement (IFTA), interstate carriers reconcile their fuel-tax obligations based on miles traveled in each jurisdiction and eligible tax-paid fuel purchases.

Simply suspending the tax collected through distributors without addressing corresponding motor carrier tax obligations could result in some carriers owing additional taxes when filing their fuel-tax returns, offsetting the intended savings.

The associations believe any temporary diesel tax holiday should include four essential provisions:

• Meaningful diesel tax relief: Suspend the applicable Pennsylvania diesel tax for a defined, short-term period, ensuring that commercial motor carriers are included.
• Coordinated motor carrier tax treatment: Address the OCFT, MCRT, and applicable IFTA requirements so that carriers receive the intended relief, whether they operate exclusively in Pennsylvania or across state lines.
• Clear implementation and accountability: Establish effective dates, inventory transition rules, and guidance for fuel distributors and motor carriers, along with mechanisms to ensure that savings are passed through to fuel purchasers.
• Full protection of transportation funding: Replace lost Motor License Fund revenue dollar for dollar to preserve funding for highway and bridge maintenance and improvements.

Other states have already implemented temporary fuel-tax relief. Ohio began a 90-day motor fuel tax holiday on October 4, with replacement transportation funding and requirements that fuel retailers pass the savings on to consumers. Georgia has also suspended fuel taxes and issued specific IFTA guidance addressing tax-exempt fuel purchases and miles traveled during its suspension.

These examples demonstrate that immediate relief can be paired with measures to protect transportation funding and address the administrative complexities of motor carrier taxation.

PMTA and PBA Also Call for Temporary Suspension of Biodiesel Blending Requirement

In addition to a temporary diesel tax holiday, the associations are calling for the suspension of Pennsylvania's requirement that diesel fuel sold for highway use contain at least 2% biodiesel.

The requirement, established under Act 78 of 2008, limits flexibility in diesel fuel distribution. Temporarily suspending the mandate could give suppliers and retailers more options to obtain fuel, help address potential supply constraints, and reduce blending-related costs during a period of elevated diesel prices.

Pennsylvania has taken this step before. In 2022, the Department of Agriculture temporarily suspended aspects of the 2% blending requirement to provide greater flexibility in the diesel supply chain.

State law already authorizes the Department of Agriculture, in consultation with the Department of Environmental Protection, to suspend or reduce the blending mandate when warranted by substantially increased costs to consumers or fuel supply and distribution concerns.

PMTA and PBA are urging the Shapiro administration to exercise this existing authority to temporarily suspend the 2% biodiesel requirement as an additional measure to help ease diesel costs and improve fuel supply flexibility.

The suspension would not prohibit biodiesel use. Suppliers could continue offering biodiesel blends, but would have greater flexibility to respond to market conditions. Any savings would depend on fuel prices and distribution conditions.

What About President Trump's Red-Dyed Diesel Executive Order?

Separately, President Trump signed an executive order on October 5 intended to provide temporary relief by permitting broader use of red-dyed diesel in highway vehicles through December 31, 2026.

Red-dyed diesel is generally sold for agricultural, construction, and other off-road uses without the highway fuel taxes normally applied to clear diesel. Its use in highway vehicles is ordinarily prohibited.

The executive order directs federal officials to provide relief from certain penalties associated with highway use of dyed diesel. It also directs the Treasury Department to consider deferring certain federal excise-tax obligations and exploring possible forgiveness of those taxes.

However, the order does not automatically eliminate federal diesel taxes, suspend Pennsylvania's diesel tax, or override state restrictions on dyed-diesel use.

Further IRS guidance is needed to clarify which taxpayers qualify, how deferred taxes will be handled, whether any credits, refunds, or other relief will be available, and when any deferred obligations must be paid.

Legislation is also being considered in Pennsylvania to clarify that motor carriers may use red-dyed diesel under the temporary federal relief provisions. PMTA supports giving carriers this additional option, while recognizing that its practical benefits may be limited.

Important Considerations Before Using Red-Dyed Diesel

Although the executive order may create an opportunity for temporary fuel-cost relief, motor carriers should carefully consider several significant concerns before using dyed diesel in highway vehicles.

• IFTA tax obligations: The federal executive order does not eliminate state fuel-use taxes under IFTA. Carriers operating in multiple states may still owe taxes based on miles traveled in each jurisdiction. Because dyed diesel is generally purchased without highway fuel taxes, carriers may not receive the same tax-paid fuel credits available for regular diesel purchases. This could substantially reduce anticipated savings or result in additional taxes owed when filing IFTA returns.

• Traveling across state lines: Federal penalty relief does not automatically override state laws or enforcement requirements. Even if Pennsylvania authorizes dyed-diesel use, other states may have different rules. A carrier could legally use dyed diesel in Pennsylvania but encounter enforcement issues when traveling into another state.

• Fuel availability and accessibility: Red-dyed diesel is typically distributed for agricultural, construction, and other off-road applications rather than through the commercial truck stop network. Carriers may need different suppliers or fueling arrangements, potentially adding transportation, storage, or delivery costs.

• Recordkeeping and audits: Carriers should maintain detailed records of dyed-diesel purchases, dates, quantities, and applicable tax treatment. Interstate carriers must also ensure that fuel-tax reporting accurately reflects purchases made without highway taxes. Incorrect reporting or inadequate documentation could result in tax assessments, penalties, or audit complications.

• Expiration of temporary relief: The executive order provides relief through December 31, 2026. Carriers should consider the implications of dyed diesel remaining in their vehicle tanks after that date. Without clear transition guidance, fuel legally purchased during the relief period could create enforcement questions after the authorization expires.

• Federal tax relief is not automatic: The executive order provides for possible deferral of certain federal excise taxes, rather than automatically eliminating them. Additional IRS guidance is needed to establish the specific relief available, eligibility requirements, and whether and how taxpayers may receive a credit, refund, or other benefit. Carriers should not assume that purchasing dyed diesel will result in immediate or permanent federal tax savings.

• Potential warranty implications: The red dye itself does not make diesel unsuitable for highway engines, and using dyed diesel may not automatically void a manufacturer's warranty. However, carriers should verify that any fuel purchased meets the engine manufacturer's specifications, including ultra-low-sulfur diesel requirements. Fuel that does not meet those specifications could cause engine or emissions-system problems, and related damage may not be covered under warranty. Carriers should check with their equipment manufacturers before using alternative fuel sources.

• Uncertain actual savings: Any potential financial benefit depends on federal and state tax treatment, IFTA obligations, supplier pricing, and compliance costs. These factors could significantly reduce or even eliminate the expected savings from using dyed diesel.

PMTA supports giving motor carriers the option to use red-dyed diesel where legally permitted, but that should not be confused with recommending its use. Carriers should consult their fuel-tax and compliance professionals and verify applicable requirements before changing fueling practices.

‼️ PMTA and PBA Urge Legislative Action ‼️

While dyed-diesel flexibility may offer another option for some carriers, PMTA and PBA believe a temporary suspension of Pennsylvania's diesel tax would provide a more direct and broadly accessible form of relief.

Diesel costs affect far more than trucking companies. Trucks transport the raw materials, manufactured products, food, fuel, and consumer goods that Pennsylvania businesses and families rely on every day, while buses transport workers, students, tourists, and other passengers to destinations throughout the Commonwealth. Higher transportation costs can ripple throughout the economy, increasing the cost of goods and services for Pennsylvania businesses and families.

A temporary diesel tax holiday will not resolve every challenge facing the trucking and motorcoach industries, nor will it eliminate the need for a sustainable long-term transportation funding strategy. However, a carefully structured suspension can provide short-term financial relief to both industries without sacrificing critical infrastructure investment.

PMTA and PBA urge the General Assembly and Governor to act promptly to enact a temporary diesel tax holiday that delivers real savings to motor carriers, addresses interstate fuel-tax obligations, and fully protects the Motor License Fund.

Both associations will continue working with policymakers and monitoring federal and state guidance to ensure that any relief measures are practical, effective, and beneficial to Pennsylvania's trucking industry.