Ralegh -- October 2, 2026: North Carolina Gov. Josh Stein has directed the state Department of Revenue to provide temporary penalty relief for farmers using red-dyed diesel fuel on highways for agricultural purposes. This move, effective as of October 2, 2026, aims to ease financial burdens for Western North Carolina farmers during the critical harvest season, when fuel use is particularly high, and could potentially stabilize local food costs for Asheville families.
The directive, issued on September 30, instructs Revenue Secretary McKinley Wooten to suspend state penalties for the highway use of dyed diesel connected to farming and agricultural activity through December 31, 2026. This policy applies to anyone selling or using dyed diesel from bulk storage for highway use associated with farming. The state action comes as diesel prices have reportedly reached approximately $6.25 per gallon in North Carolina, influenced by rising energy costs and international instability.
Governor Stein stated the measure would "ease the burden on farmers during their most fuel-intensive time of year" and reduce upward pressure on grocery prices. Red-dyed diesel is typically intended for off-road equipment and is sold without the taxes imposed on highway fuel. Its use on public roads ordinarily incurs penalties because the dye indicates that highway taxes have not been paid.
It is important to note that this relief is a penalty waiver, not a tax exemption. Farmers or fuel sellers must still pay the 41-cent-per-gallon North Carolina motor-fuels excise tax on dyed diesel used on highways. They are also required to file the state Motor Fuel Backup Tax Return, Form GAS-1259, to report the fuel and pay the tax. The waiver applies only to qualifying farming and agricultural uses within North Carolina.
While the order is statewide, its relevance to Western North Carolina farmers is significant during harvest, when producers often use trucks and other highway vehicles to transport crops, equipment, and supplies. This policy allows qualifying producers with existing stores of untaxed dyed diesel to use that fuel on North Carolina roads while paying the state tax, rather than having to discard or replace it at current market prices. This is expected to directly impact the operational costs for local produce farms and apple orchards prevalent in the Greater Asheville Area, though specific farmer testimonials on the immediate impact were not provided.
A significant limitation of the state's action is that it does not eliminate federal penalties. Governor Stein has asked the Internal Revenue Service for comparable federal relief, but as of October 2, federal penalties had not been suspended. This means a driver could avoid a North Carolina penalty while still potentially facing federal enforcement. Additionally, the state Revenue Department advises users to flush fuel systems before January 1, 2027, as dyed fuel remaining in a vehicle’s tank after the relief period could create problems once the waiver ends.