Iowa expands dyed-diesel relief for farm hauling

Farmers hauling grain, livestock or feed on Iowa roads have more flexibility in the fuel they use this fall. But the temporary dyed-diesel relief comes with a bill to plan for later.

The Iowa Department of Revenue’s October 15 guidance says qualifying haulers will owe 6% use tax on the purchase price of untaxed fuel used during the relief period after the proclamation expires. It tells users to keep receipts, invoices and driving logs.

Iowa’s relief runs through February 4, 2027, according to the department. That matches the signed proclamation, resolving the earlier news release’s conflicting February 2 date. Covered loads include corn, soybeans, hay, livestock, feed, fertilizer, manure and other specified farm products.

The permission follows the load. Other uses remain prohibited, and fuel put in a tank during the relief period cannot be used for covered highway hauling after it expires. Iowa’s permission also stops at the state line: travelers must follow the next state’s rules.

Federal relief has its own timetable. The IRS announced October 14 that it will waive related federal excise-tax penalties for highway use from October 1 through December 31, 2026. An October 21 announcement also provides temporary reporting and recordkeeping relief for the specified federal liability. Other Form 720 obligations remain in place.

Those federal announcements do not cancel Iowa’s recordkeeping requirements. They also should not be read as a promise that the underlying federal tax has been forgiven: the IRS said further payment guidance was forthcoming and that it would explore ways to eliminate deferred amounts.

For local farmers and haulers, the practical distinction is between temporary permission to use the fuel and what must be paid or documented later. Check Iowa Revenue’s dyed-diesel guidance and the IRS’s current instructions before changing fuel practices, especially for trips outside Iowa.