LITTLE ROCK, Ark. — Governor Sarah Huckabee Sanders has issued an executive order granting temporary relief from state taxes and penalties on dyed diesel fuel for farmers and timber harvesters operating qualifying highway vehicles.
Executive Order 26-15, signed Tuesday, declares a statewide emergency in response to elevated diesel prices. It allows eligible agricultural and forestry businesses to use dyed diesel typically designated for off-road use in their highway vehicles without incurring additional state taxes and penalties. The order is in effect from Sept. 30, 2026, through Oct. 30, 2026, unless amended or extended.
To qualify, vehicles must be registered in Arkansas, owned and operated by an agriculture or forestry business, and primarily used for that business’s activities. Only vehicles classified under Arkansas' registration law as Class 2, 3, 4, 5, 6, or 8 are eligible, and vehicles licensed under the International Fuel Tax Agreement are excluded.
The order also suspends penalties associated with mixing dyed and undyed diesel fuel in eligible vehicles’ tanks. Under state law, such activities typically result in an additional tax and a $10-per-gallon penalty calculated based on the full tank capacity. While the executive order halts state enforcement of these penalties, it does not exempt affected businesses from potential federal penalties. Sanders directed the Arkansas Department of Finance and Administration to request federal penalty relief from the Internal Revenue Service within three business days of the order’s effective date.
Dyed diesel fuel, which is taxed differently than highway-grade undyed diesel, is commonly used for off-road purposes like farming and timber operations. However, with diesel prices far exceeding the $2.46-per-gallon figure assumed in the University of Arkansas Cooperative Extension Service’s 2026 crop budgets, the order aims to provide short-term cost relief for these industries. The governor noted that Arkansas fuel prices are currently more than twice that estimate.
Qualifying agricultural businesses must produce food, fiber, nursery products, or livestock in commercially marketable quantities. To demonstrate eligibility, businesses must submit recent tax filings reporting farming income or, for newer operations, a business plan showing adequate resources such as land and financing. Forestry operations are defined as beginning when a tree is cut and continuing through its loading for transport.
The governor's order reflects the timing of agricultural and forestry operations, stating that crop harvesting often extends into November, while timber operations are year-round activities.
The relief measures provide targeted assistance to farmers and timber workers managing elevated operational costs during a critical period for both industries.