Indiana state Representative Beau Baird says farmers in his state are paying at least a dollar per gallon in taxes when they burn on-road diesel, and he wants to expand access to red dyed diesel during harvest to cut those input costs.

Baird, a Republican lawmaker, argues the current structure leaves growers carrying fuel costs that dig directly into already thin operating margins at the time of year when diesel demand on the farm peaks. Combines, grain trucks, tractors and augers all run hard through harvest windows, and every cent per gallon in tax compounds across the thousands of gallons a mid-size grain operation can burn in a single season.

"In total, there's at least a dollar in tax that we're paying for on-road diesel," Baird said.

Red dyed diesel is the same fuel as clear, on-road diesel except for a dye marker that identifies it as exempt from certain motor fuel taxes. The trade-off is strict regulation: dyed fuel is legal only in off-road applications such as farm equipment, and penalties for using it in on-road vehicles fall on both the operator and, in some cases, the seller. That enforcement boundary sits at the center of the problem Baird wants to address, because harvest blurs the line between on-farm and on-road fuel use.

During harvest, growers move grain from field to farm storage and then to elevators or ethanol plants, often with trucks licensed for road use. Fuel purchased off-road at the lower, untaxed price cannot legally go into those on-road tanks, even when the truck is hauling the farm's own crop. Baird's proposal would widen the circumstances under which farmers can use the cheaper dyed fuel during the harvest period, reducing the per-gallon gap between what farms pay and what the tax code intends to exempt from agricultural operations.

The stakes are straightforward arithmetic for farm margins. A combine and support equipment can consume well over a thousand gallons of diesel in a harvest season, and grain trucks add more with every round trip to the elevator. At a tax burden Baird puts at roughly a dollar per gallon on the on-road side, a single operation's harvest fuel bill can carry a four-figure tax component that dyed diesel rules prevent the farm from avoiding on road-legal hauling.

Indiana is a major corn and soybean state, and fuel ranks among the largest variable input costs for its growers, alongside fertilizer, seed and crop protection chemicals. With diesel prices holding at historically elevated levels, per-gallon tax relief functions like a targeted input subsidy that does not require new spending — it forgoes revenue instead. That framing matters for lawmakers weighing the proposal, because expanding dyed diesel access shifts cost from farm budgets to state fuel tax receipts rather than eliminating it.

Questions remain about how an expanded exemption would be administered, including how enforcement agencies would distinguish legitimate harvest-period use from off-farm consumption, and what reporting or documentation growers would need to keep for the higher-volume dyed fuel purchases the change would invite. Fuel tax enforcement in dyed diesel cases has historically relied on tank dips and dye detection at roadside checks, and any harvest-season carve-out would need to define which vehicles and which trips qualify.

Baird says the state needs to do more to deliver meaningful relief while diesel prices remain at historic highs, and he plans to keep pressing the issue as fuel costs continue to weigh on farmers' bottom lines through harvest.