When we go to fill up at the corner gas station nearby we’re all familiar with the choices of diesel and the various octane ratings of unleaded fuel. What your corner gas station may not have is a pump for dyed diesel. That isn’t really a problem for individual consumers, but it might be for business consumers who may qualify for excise tax refunds on clear diesel used in a qualifying manner.
What is dyed diesel fuel?
Dyed diesel is called by a number of different names – off-road diesel, untaxed diesel, pink or red diesel – but the only real difference between it and the clear diesel is that dye has been added. The dye is added to distinguish it from the clear diesel because dyed diesel is taxed at a lower rate by both the state and federal government.
Dyed diesel is illegal for use on roads and highways because it is taxed at a lower rate than clear diesel. The taxes on clear diesel include both state and federal taxes for the maintenance of the roads and highways. Because dyed diesel is intended to be used “off-road” the taxes to offset the costs of the wear and tear caused by vehicles operating on the roads and highways are not included in the taxes levied on dyed diesel.
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