North Dakota gives farmers a break on soaring diesel costs — could it help keep grocery prices from rising?

“Record high diesel prices are squeezing our ag producers, and this is a meaningful and timely step we can take to provide temporary relief and help our farmers and ranchers through the harvest season,” Armstrong said in a statement, noting he’s been working closely with state Agriculture Commissioner Doug Goehring on the action.

“Farmers burn more diesel during harvest than at any other time of year, and saving 19 cents per gallon can make a meaningful difference when margins are razor thin,” Goehring added. “This translates into lower transportation costs to suppliers and processors, which hopefully will be passed on to the consumer.”

Keeping costs lower for farmers

The order comes as diesel fuel prices remain cemented above the $6 per gallon mark in North Dakota, landing at $6.14 per gallon at the end of September. Meanwhile, the state’s average regular gasoline cost stands at $4.23 per gallon. That’s well above the $3.75 per-gallon cost for diesel fuel nationwide in September 2025, and the $3.17 per-gallon cost for regular gas in the same time period.

Armstrong’s executive order centers on North Dakota’s .23 cents per-gallon diesel fuel tax. But it charges only $ 0.40 per gallon on so-called red-dyed diesel, which is limited and used only for certain off-highway agricultural, industrial, and railroad purposes. The order expands red-dyed fuel use in the state’s agricultural sector to licensed vehicles “connected” to agricultural operations.

“This allows farmers to use the cheaper diesel not only for field work in their tractors and harvesting equipment but also for on-highway uses such as hauling grain, livestock, feed, seed, fertilizer, equipment and other ag inputs and products, as well as for storing and processing ag products,” the governor’s office noted in a statement.

Here’s what the tax break means for farmers

Energy experts say the diesel tax move, while a step in the right direction, will be of limited value for North Dakota farmers.

“The 19-cent-per-gallon diesel tax break would provide some relief to farmers; however, it is unlikely to eliminate the current pressure farmers face from high diesel prices,” Yagiz Sullu,

founder and lead analyst at Sullu Strategic Advisor, LLC, told Moneywise.

Since North Dakota normally taxes regular diesel at 23 cents per gallon, the new policy lets eligible farmers save on state taxes for every gallon of diesel they buy.

“However, the actual savings for farmers will depend on their scale and type of operations,” Sullu said.

For example, typical soybean and small-grain harvesting requires about one gallon of diesel per acre, and about 1.45 gallons for corn. At 19 cents per gallon, every 1,000 gallons of diesel represents $190 in savings. At 5,000 gallons, it is $950; at 10,000 gallons, it becomes $1,900. A large operation using more fuel could save several thousand dollars.

“When diesel is above $6 per gallon, 19 cents is still a relatively small percentage of the total fuel costs,” Sullu noted.

Trump wants to take the North Dakota approach nationwide

It’s not just North Dakota, as Uncle Sam also wants in on the diesel tax break trend.

On October 5 at a rally for Nebraska GOP Sen. Pete Ricketts, President Donald Trump signed an executive order temporarily expanding access to red-dyed diesel fuel. Similar to the North Dakota move on diesel fuel, the order is designed to provide cash relief to American farmers, truckers and other diesel users as fuel prices remain elevated

The order suspends federal restrictions that generally prohibit using the cheaper, normally tax-exempt fuel on public highways, potentially saving motorists approximately .24 cents per gallon in federal diesel taxes through the end of 2026.

“Today I’m announcing another unprecedented step to bring down costs,” Trump said during the rally. “For many years, farm vehicles, construction equipment and other off-road vehicles have used what is known as red-dye diesel ... Tonight I’m going to sign an historic executive order to officially waive the off-road requirement and allow anyone to purchase tax-free red-dye diesel for any reason.”

Yet Federal permission does not automatically override state diesel-tax laws. That will be a big issue as states respond to Trump’s order.

“Allowing temporary relief like North Dakota can provide relief for farmers in other states,” Sullu noted. “However, widespread tax breaks will reduce government revenue and will not tackle the fundamental issue, which is to increase the physical supply of diesel.”

Other states may try to create a temporary, targeted relief policy for the agriculture sector rather than a broad, permanent suspension of diesel taxes like Team Trump is doing. “A tax break on diesel is only a temporary measure,” Sullu added. “If inventories remain low and global refining continues to be under pressure, diesel prices will continue to increase.”