How Much Is Farm Diesel Per Gallon?

Farm diesel is a specialized fuel type designed for agricultural machinery and equipment. This fuel is distinct from the diesel used in on-road vehicles, primarily due to its intended use and tax structure. Understanding its pricing is important for farmers and agricultural businesses, as it directly impacts operational costs.

Current Price of Farm Diesel

The price of farm diesel varies significantly based on geographic location, supplier, and time of year. As of mid-August 2025, the average retail price for on-highway diesel fuel across the United States is approximately $3.71 to $3.72 per gallon. Farm diesel, intended for off-road use, carries a lower price due to tax exemptions. For instance, some agricultural cooperatives may offer off-highway diesel for around $2.40 per gallon, with potential bulk purchase discounts. These prices fluctuate daily, reflecting dynamic market conditions.

Factors Influencing Farm Diesel Prices

Several factors contribute to the variability in farm diesel prices. Global crude oil prices are a primary determinant, as crude oil is the raw material from which diesel is refined. Fluctuations in international supply and demand, as well as geopolitical events, directly impact these foundational costs. Refining expenses, the processes needed to convert crude oil into diesel fuel, also play a role in the final price.

Transportation costs, moving refined diesel from refineries to distribution centers and farms, further influence per-gallon prices. Distance from major supply hubs and local delivery charges contribute to these expenses. Seasonal demand also affects pricing, with higher consumption during peak agricultural periods like planting and harvest seasons potentially leading to temporary price increases. Regional supply and demand dynamics, along with local competitive landscapes among fuel distributors, create additional price variations.

Taxation of Farm Diesel

A significant reason for the distinct pricing of farm diesel stems from its tax-exempt status. Farm diesel, often called dyed diesel, is generally exempt from federal excise taxes and many state road use taxes. The Internal Revenue Code imposes a federal fuel tax on diesel fuel, typically 24.3 cents per gallon, plus an additional 0.1 cent for the Leaking Underground Storage Tank fund. However, diesel fuel used “on a farm for farming purposes” is specifically exempt from this federal tax.

This tax exemption exists because farm diesel is not used on public roads, thus not contributing to road maintenance. To differentiate this tax-exempt fuel from taxable on-road diesel, farm diesel is dyed red or another color. Using dyed diesel for non-agricultural, taxable purposes, such as in vehicles operating on public highways, can result in substantial financial penalties.

The IRS may impose fines, including the unpaid federal excise tax of 24.4 cents per gallon, plus a penalty of $10 per gallon or $1,000 for the fuel involved. Fuel sellers must display clear notices on dispensers to inform users of its restricted application. Farmers who inadvertently pay taxes on exempt fuel can seek a refund or credit against their income tax liability by filing IRS Form 8849 or Form 4136.

Locating Farm Diesel Suppliers and Prices

To find current farm diesel prices and reliable suppliers, individuals can utilize several resources. Local agricultural cooperatives are often a primary source, providing competitive pricing and delivery services. Bulk fuel distributors and dedicated farm supply stores also serve as key suppliers for agricultural operations. Specialized oil companies focusing on commercial and agricultural fuel needs can also offer comprehensive services.

It is advisable to contact multiple suppliers in your area to compare quotes, as prices can vary significantly. Some agricultural publications or online resources may provide regional average prices, offering a general overview of market trends. However, direct contact with suppliers remains the most effective method for obtaining accurate and current local pricing information.