North Carolina farmers can now run untaxed dyed diesel on public roads without facing state penalties through the end of the year, after Governor Josh Stein directed state revenue officials to suspend enforcement of the long-standing prohibition. The move comes as diesel prices in the state hit a record $6.25 per gallon in September, squeezing growers just as they head into fall harvest.
Stein posted the directive in a message on X, writing that North Carolina's farmers have been feeling the squeeze of tariffs, drought, crop loss, and skyrocketing fuel prices, and that the state is taking action to ease the burden. According to Governor Josh Stein
, he is directing the North Carolina Department of Revenue to provide relief from the state's dyed diesel penalty through the end of 2026, a step he said would lower fuel costs for farmers and reduce upward pressure on food prices. Many North Carolina farmers already have dyed diesel fuel on hand, he noted, and the suspension gives them a way to use it without running afoul of state law.
Dyed diesel is fuel marked with red dye specifically for off-road farm equipment because it is exempt from the state's highway motor fuel tax. Under normal circumstances, driving on public highways with untaxed dyed diesel is a Class 1 misdemeanor in North Carolina, carrying a civil penalty of $1,000 or five times the motor fuel tax due, whichever is greater, according to North Carolina General Statutes § 105-449.117. Stein's directive suspends enforcement of that prohibition rather than eliminating the underlying law.
A Rapid Response To Farm Groups
The governor's office says Stein issued the waiver less than 24 hours after receiving a joint formal request from the North Carolina Farm Bureau and a coalition of state agricultural and timber producers, according to the North Carolina Office of the Governor. The speed of the response underscores how urgently farm groups flagged record diesel costs as their top concern heading into harvest, per the governor's office.
The price spike is not isolated to North Carolina. U.S. domestic inventories of diesel fuel dropped to 107.9 million barrels in September, the lowest level recorded since federal recordkeeping began, the governor's office noted. North Carolina has also seen high diesel costs. The stakes for North Carolina are significant: agriculture is the state's largest economic sector, employing one in every five workers and generating $117 billion in annual economic activity, per the same office.
Drought Losses Piled On Before Harvest
The fuel spike arrives on top of an already brutal year for North Carolina growers. Federal climate monitoring in July found that 43.6% of the state was locked in extreme drought, with 6% reaching exceptional drought status — one of the worst dry spells the state has seen in nearly two decades, according to AgroLatam. Those moisture deficits damaged major crops including corn, tobacco, and livestock feed.
The federal government had already acknowledged the severity of the drought months earlier. In April, the USDA Farm Service Agency designated 40 North Carolina counties as primary disaster areas due to severe drought conditions. Hoodline previously reported on how spring drought and rising costs strained growers even before the fall fuel crunch set in.
Federal Relief Still An Open Question
Stein's directive covers state enforcement only. Highway use of dyed diesel remains a violation of federal law under Internal Revenue Service rules unless the IRS grants its own penalty waiver, and the governor has urged the federal government to provide North Carolina farmers and families the same relief at the federal level. Whether the IRS grants that request remains unresolved.
North Carolina is not acting alone. Governors in at least nine states — including North Carolina, Oklahoma, Alabama, Arkansas, Louisiana, Missouri, Nebraska, North Dakota, and Texas — enacted similar executive actions in late September to ease dyed diesel enforcement for harvest season, the Associated Press reported via KSAT. Oklahoma Governor Kevin Stitt made a similar move two days earlier, requesting a 120-day pause in that state's red-dyed diesel enforcement, as Hoodline reported in its coverage of the Oklahoma dyed diesel pause.
With the highway penalty suspended, the relief gives farmers a way to use dyed diesel on public roads during harvest, even as the broader question of federal cooperation remains unanswered.
