FAQs Regarding the Temporary Suspension of Motor Fuel Excise Tax and Dyed Diesel Enforcement
Issued by: Excise Tax Administration
Date: November 12, 2026
The primary purpose of this document is to allow the North Carolina Department of Revenue (“NCDOR”) to provide answers to frequently asked questions (FAQs) about Session Law 2026-62 and how it impacts certain Motor Fuel Excise Tax Returns (“Tax Returns”).
These FAQs are issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. If an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs are made.
I. General Questions
A1. Session Law 2026-62 provides the following motor fuel excise tax relief:
- Suspends the motor fuel excise tax from October 10 through November 30, 2026 (the “Suspension Period”).
- Waives civil and criminal penalties during the waiver period for using dyed diesel fuel in a highway vehicle for farming or agricultural purposes.
- Waives civil and criminal penalties during the waiver period for dispensing, or allowing the dispensing of, dyed diesel fuel into a highway vehicle’s supply tank.
- Exempts dyed diesel fuel used in a highway vehicle from the motor fuel excise tax from October 1 through December 31, 2026, when the user holds a valid NCDOR exemption certificate as a qualifying farmer, conditional farmer, commercial logger, commercial fisherman, or wildlife manager.
A2. If you believe you were charged the motor fuel excise tax during the Suspension Period, you may file a complaint with the North Carolina Department of Justice.
A3. Suppliers and terminal operators generally collect and remit North Carolina’s motor fuel excise tax.
A4. Yes. Suppliers and importers collect the motor fuel excise tax, but the tax is ultimately reflected in the price consumers pay at the pump.
The table below offers a brief summary of how the motor fuel excise tax functions.
| Person | Role | How the Tax Moves Through the Supply Chain |
|---|---|---|
| Supplier | Removes fuel from terminal | Collects excise tax from distributors when fuel is removed from a terminal |
| Importer | Imports fuel into North Carolina | Remits excise tax when fuel is imported into North Carolina |
| Distributor / Retailer | Purchases fuel from supplier or importer | Pays the excise tax included in the purchase price, which is passed through the supply chain |
| Consumer | Final purchaser and consumer of fuel | Pays the tax indirectly through the retail price of the fuel |
II. Motor Fuel Tax Rate Suspension
A5. Yes. The inspection tax remains in effect and must be paid on the applicable Tax Return.
A6. Yes. You must file a Tax Return during the Suspension Period, even if no motor fuel excise tax is due.
A7. Yes. The Suspension Period covers every fuel subject to the motor fuel excise tax, including gasoline, clear diesel, biodiesel, gasohol, fuel-grade ethanol, gasoline blendstocks, compressed natural gas (CNG), liquefied petroleum gas (LPG), and liquefied natural gas (LNG).
A8. No.
A9. No.
A10. Report all motor fuel transactions during the Suspension Period on the applicable Tax Return. To calculate the motor fuel excise and inspection taxes due for each month, see NCDOR’s important notice dated November 12, 2026.
III. Dyed Diesel Fuel
A11. First, Session Law 2026-62 waives civil and criminal penalties during October 1, 2026 through December 31, 2026 (collectively, “Waiver Period”) for a person who uses dyed diesel fuel for farming or agriculture purposes in a highway vehicle. Under the law, farming or agricultural purposes include crop cultivation, livestock rearing, forestry, aquaculture, and related agribusiness activities.
Second, no motor fuel excise tax accrues during the Waiver Period on dyed diesel fuel used to operate a highway vehicle by a person who holds a valid exemption certificate issued by NCDOR as a qualifying farmer, a conditional farmer, a commercial logger, a commercial fisherman, or a wildlife manager.
In either case, the person must file Form GAS-1259, Motor Fuel Backup Tax Return.
A12. Dyed diesel fuel is considered used when it is placed in a highway vehicle’s supply tank.
A13. When filing Form GAS-1259, you must also file GAS-1259DS and report the gallons used under Schedule 5U. For more information, see the instructions for Form GAS-1259.
A14. NCDOR has issued an Important Notice dated November 12, 2026, that provides guidance to help taxpayers complete Form GAS-1259.
A15. Yes. During the Waiver Period, retailers must continue collecting sales and use tax on dyed diesel fuel unless the purchaser provides the required exemption certificate.
A16. Yes.
A18. Yes
A19. Under NCDOR’s Important Notice, the motor fuel excise tax remained due from October 1 through December 31, 2026.
By contrast, Session Law 2026-62 suspended the motor fuel excise tax on dyed diesel fuel used in highway vehicles during the following periods:
- October 10 through November 30, 2026, for all users; and
- October 1 through December 31, 2026, for users holding a valid NCDOR exemption certificate as a qualifying farmer, conditional farmer, commercial logger, commercial fisherman, or wildlife manager.
A20. If you do not hold an applicable valid exemption certificate issued by NCDOR, and you used dyed diesel fuel in a highway vehicle, you are subject to tax, penalty, and interest.
A21. Yes. NCDOR advises anyone who used dyed diesel fuel in a highway vehicle during the Waiver Period to have the vehicle’s supply tank flushed. A person is subject to civil and criminal penalties if the dye is detected in the supply tank.
A22. No. Residual dye in the storage tank may contaminate fuel transferred to a highway vehicle and remain in the vehicle’s supply tank for an extended period. After the Suspension Period, detected dye may result in civil and criminal penalties. These bulk end-users are also subject to additional recordkeeping requirements under 17 NCAC 12B .0405.
IV. Motor Fuel Refunds
A23. Yes. You may may claim a motor fuel excise tax refund by filing Form GAS-1201Q, for motor fuel purchased before and after the suspension period. For example, motor fuel purchased on October 5, 2026, is eligible for refund. Motor fuel purchased on October 15, 2026, is not eligible for refund.
A24. Yes, you are eligible to claim a motor fuel excise tax refund on Form GAS-1201Q, if the purchase was made tax-paid.
V. Motor Carriers & IFTA (International Fuel Tax Agreement) Returns
A25. See NCDOR’s Important Notice for Motor Carriers.
A26. Yes.
VI. Miscellaneous / Other
A27. First, review NCDOR’s Important Notice dated October 12, 2026, and the Important Notice dated November 12, 2026.
If you still have questions, call the Excise Tax Division at 1-877-308-9092 or 919-707-7500, Monday through Friday, 8:00 a.m. to 4:30 p.m. Eastern Time, or write to Customer Service, PO Box 1168, Raleigh, NC 27602-1168.
A28. To stay informed about law changes, taxpayers should subscribe to receive NCDOR e-alerts. NCDOR e-alerts are a convenient way to receive timely information from NCDOR.
A29. No.