Gov. Sarah Huckabee Sanders signed Executive Order 26-15 on Tuesday, Sept. 29, declaring a statewide emergency over diesel costs and easing a rule that keeps dyed diesel off public roads. The relief covers qualifying farm and timber operations and runs Sept. 30 through Oct. 30 unless it is amended or extended.
The rule being relaxed. Dyed diesel carries a lower state excise tax and is exempt from the federal highway tax, in exchange for being limited to off-road use. Under the order, the state will not assess the extra taxes and penalties that normally apply when it is burned in a highway vehicle or mixed with clear diesel, but only for eligible operators.
Who qualifies. The vehicle must be registered in Arkansas, owned and run by a farm or forestry business, and used mainly for that business. According to the NEA Report, it must also fall within vehicle Classes 2–6 or 8 and cannot be licensed under the International Fuel Tax Agreement. Farms are defined by commercial production of food, fiber, sod, nursery products or livestock; forestry covers timber harvesting through loading in the field.
Limits. The order is narrower than headlines about “tax-free diesel” suggest. The state order does not itself grant federal penalty relief, so it directs the Department of Finance and Administration to ask the IRS for relief within three business days.
Why now. KAIT quoted Sanders tying the move to high input costs as harvest season gets under way. According to the NEA Report, the order cites diesel prices well above the assumptions in the University of Arkansas Cooperative Extension Service’s 2026 crop budgets, which used $2.46 a gallon.
Sources: Arkansas Democrat-Gazette (Sept. 29); KAIT (Sept. 29); NEA Report (Sept. 30).
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