Legal and Illegal Use of Dyed Fuel
In a Licensed Motor Vehicle
Some diesel fuel is dyed red to mark it as tax-exempt fuel. The presence of dye makes it easier to find tax cheaters who are trying to avoid paying state or federal excise tax. Dyed fuel may be used only in non-licensed ("off-road") vehicles or equipment, or for specific activities.
It is illegal to use dyed fuel in licensed trucks or other vehicles running on public roads or highways (except for some government vehicles and buses). This type of tax evasion costs several hundred million dollars in lost state and federal excise tax revenue each year.
Those stolen funds reduce the amount of money available for road improvements and highway or bridge construction, which are largely funded by fuel excise taxes. In addition, dishonest truckers or fuel sellers who do not pay the tax are illegally lowering their expenses and may then undercut the prices of their law-abiding competitors.