Iowa Farmers Get Diesel Tax Relief During Harvest

Iowa farmers are getting some temporary relief on those rising diesel costs as harvest is officially underway. That's due to a new proclamation from Gov. Kim Reynolds spurred on by a Trump executive order.

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Reynolds signed the proclamation Tuesday, temporarily suspending certain Iowa penalties and regulatory provisions involving the use of dyed diesel fuel on public roads. The change applies to vehicles transporting specific agricultural products, including corn, soybeans, hay, straw, silage, stover, fertilizer, manure and distillers grains. The proclamation took effect immediately and is scheduled to remain in place through February 2nd, 2027.

This change could seriously help farmers move products this harvest. Dyed diesel, often called off-road diesel, is generally not subject to Iowa's fuel tax when it is used for off-highway purposes. The Iowa Department of Revenue says dyed diesel will remain exempt from the state's fuel tax, although it can still be subject to Iowa sales and use tax. Reynolds' proclamation temporarily suspends Iowa provisions that restrict the use and sale of dyed diesel for the specified agricultural transportation on public roads.

The timing is extremely important for Iowa's agriculture community and economy. The state's latest crop report shows that 85% of Iowa's corn had reached maturity as of October 4th, while just 7% had been harvested. Soybean harvest was at 5%. The report also noted that Iowa had just 1.2 days suitable for fieldwork during the week because of wet conditions.

Credit: Joyce Vonk | Oskaloosa farmers deal with wet conditions while harvesting, October 5th, 2026 — Credit: Joyce Vonk | **Oskaloosa farmers deal with wet conditions while harvesting, October 5th, 2026**

Farmers are entering a period when moving grain and harvest equipment can require a lot of fuel. The state has already taken other steps to make harvest transportation easier. A September proclamation has temporarily allowed qualifying overweight loads of agricultural products to travel on Iowa highways without an overweight permit; subject to specific weight, axle and road restrictions. That proclamation is scheduled to expire October 10th, but could be extended. The new dyed diesel proclamation is different because it addresses the fuel used for qualifying transportation rather than the weight of the load.

Farmers benefit when they can use dyed diesel for an eligible on-road agricultural load, the fuel tax relief reduces the cost of the fuel needed to move that product. With harvest already requiring significant transportation, even a reduction in the cost per gallon can matter to a farmer's bottom line. The federal action also temporarily defers the 24.4-cent-per-gallon federal diesel excise tax on qualifying dyed diesel through the end of 2026.

At the same time, the Iowa's proclamation should not be read as a broad reduction in state diesel prices for all. The relief is limited to the agricultural uses and products identified in the proclamation. It also does not mean every vehicle traveling Iowa roads can switch to dyed diesel.

With corn and soybean harvest still behind their five-year averages, this temporary relief arrives during a period when Iowa farmers are trying to get crops out of the field and moved where they're needed.