Democratic Caucus Requests Special Session on a Diesel Fuel Tax Holiday

October 12, 2026

The Honorable Larry Rhoden

Governor of South Dakota

500 East Capitol Avenue

Pierre, SD 57501

Dear Governor Rhoden,

On behalf of the Joint Democratic Caucus, we urge you to call the South Dakota Legislature into special session to enact a temporary motor fuel tax holiday on diesel.

South Dakotans are paying the highest diesel prices in our state's history. The statewide average hit $6.29 a gallon on September 21, the highest AAA has ever recorded here, and it stood at $5.98 this past weekend. That is $2.66 more per gallon than a year ago. Our farmers are in the middle of harvest, and our truckers are hauling that harvest along with every other good that reaches a grocery shelf. Families who never fill a diesel tank still pay for it, because diesel is built into the price of everything they buy.

These prices are the cost of the international conflicts, in Iran and in Ukraine, that have choked global fuel supply with no end in sight. Energy analysts and experts across the country agree that diesel will not get cheaper until those situations come to an end. In the meantime, South Dakota’s agricultural producers and consumers pay the price every time they fill up.

We appreciate the intent of the steps your administration has taken. However, these steps are not enough and may create new problems here at home:

• Red-dyed diesel is not a real option for most South Dakotans. Dyed fuel is delivered in bulk to permitted users and is not sold to the general public. On Thursday, October 8, the South Dakota Department of Revenue confirmed that anyone without an agricultural exemption still owes state and local tax on it, while advising everyone else not to use it on the road. Farmers are also worried about being fined for trace dye left in their tanks once the federal order expires.

• Heavier loads will cost us later. Executive Order 2026-11 allows agricultural haulers to run 10% over standard weight limits. Fewer trips save some fuel, but our county and township roads were not built for that weight, and that repair bill will land with counties, townships, and municipalities who are the least prepared to pay for it.

• Importing diesel from Russia may be problematic. The federal government has suspended sanctions on Russian diesel for six months. Leaning on an adversary that is waging one of these wars does nothing to solve a problem we need to solve here in South Dakota, nor does it advance any measure that will reduce diesel prices long-term.

A diesel tax holiday is the most direct relief available, and only the Legislature can provide it. Your office has said that state fuel taxes are set in statute, cannot be waived by executive order, and may require legislation. We agree, and this is the solution that will do the most to help South Dakotans directly. It is urgently needed and needs an immediate response.

Our commonsense proposal is targeted, and tailored to the South Dakota’s legal context and critical needs. It will:

• Reduce the motor fuel tax from 28 cents to 1 cent per gallon on diesel products so the Departments of Revenue and Transportation can continue to count every gallon sold.

• Add new statutory definitions to ensure this tax holiday specifically applies to diesel, where prices are at record highs and the burden on agriculture and freight is passed to the consumer.

• Use that 1 cent per gallon mechanism to track the precise number of diesel gallons purchased to backfill the State Highway Fund and other recipients of fuel tax revenue from reserves to preserve the State’s ability to receive federal highway funds.

• End the tax holiday December 31, 2026, following the harvest and Christmas seasons.

This is a simple but critical fix, and other states have come to it before us. Georgia, Nebraska, Indiana, Ohio, and Utah have all taken similar action. Our own farmers, including associations like the South Dakota Farmers Union, have also asked you and legislators to call a special session for this purpose. Every week that passes without relief is money our producers and families will not get back.

Governor, we urge you to call a special session and deal with this now. We are prepared to work with you for the good of South Dakota.

Senator Liz Larson

Senate Minority Leader, District 10

Representative Erin Healy

House Minority Leader, District 10

Senator Jamie Smith

Assistant Senate Minority Leader, District 15

Representative Eric Emery

Assistant House Minority Leader, District 26A

Representative Kadyn Wittman

House Minority Whip, District 15

Representative Nicole Uhre-Balk

House Minority Whip, District 32

Representative Erik Muckey

District 15

cc: Members of the South Dakota Legislature

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