Dyed diesel fuel and dyed kerosene. Dyed diesel fuel and dyed kerosene used for a nontaxable use (such as farm use) are not taxed. However, the tax applies if these fuels are used for a taxable use (such as in operating a vehicle on the highway). In addition, a penalty is imposed on a person who uses dyed diesel fuel or dyed kerosene for a taxable use and knows or has reason to know the fuel was dyed. For more information, see How To Buy Diesel Fuel and Kerosene Tax Free.

Undyed diesel fuel and undyed kerosene. A registered ultimate vendor that sells undyed diesel fuel or undyed kerosene for use on a farm for farming purposes is allowed to claim a credit or refund of the excise tax on that fuel. Farmers cannot claim a credit or refund for the excise tax paid on that fuel. See How To Buy Diesel Fuel and Kerosene Tax Free.

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