Could Montana suspend its fuel tax?

Reader-driven questions answered by the reporters of Montana Free Press.

Diesel prices have spiked since March, a result of the U.S. conflict in the Middle East and the ongoing war between Ukraine and Russia. The increased cost has strained Montana farmers, ranchers and truckers, who economists say will ultimately pass on those costs to consumers to help stabilize their bottom lines. 

What can state officials do, if anything, to help ease those economic pressures? One Montana Free Press reader reached out to us with the same question, specifically inquiring about how the state fuel tax — including a 30-cent premium on diesel — could be repealed. 

The answer is: Not very easily.

The cost of gasoline has jumped about 55% since the start of 2026. Diesel is up 78%. The hikes were triggered by the ongoing tensions around vital shipping lanes across the Middle East and prolonged war in Ukraine. 

Taxes, including those levied by the state of Montana, are stacked on top of those already painfully high costs. 

Montana, like every other state, has a tax on various kinds of motor vehicle fuel. In the Treasure State, it’s about 33 cents per gallon of gas and 30 cents per gallon of diesel. There’s also a federal tax on both gas and diesel, bumping up the per gallon premium at the pump to 51 cents and 54 cents, respectively.

A handful of states — Georgia, Indiana, Ohio and Utah — have recently modified their fuel taxes as residents — and likely voters — raise alarms about affordability.

In Montana, only the state Legislature can increase, reduce or suspend the fuel tax. And because the legislative session won’t begin until January 2027, lawmakers have their hands tied. Either the governor or a majority of members of the Legislature could call a special session, but with the scheduled biennial session just more than two months away, that appears highly unlikely. Reached by phone Thursday, House Majority Leader Steve Fitzpatrick, R-Great Falls, and Senate Majority Leader Tom McGillvray, R-Billings, confirmed to MTFP that they did not intend to call a special session to modify the fuel tax. 

At least one high ranking state official also indicated that a fuel tax suspension wouldn’t be wise. Larry Flynn, the recently-appointed director of the Montana Department of Transportation, told MTFP in a Tuesday email that “suspending or eliminating the fuel tax would have a negative impact on Montana’s highway and bridge infrastructure.”

Fuel taxes generate roughly $300 million for the state each year, according to Flynn. The MDT uses two-thirds of that revenue — about one-third is distributed to local governments, Montana Highway Patrol and a few other programs — to fund operations, maintenance and construction. New bridge and road projects benefit from a federal match program, Flynn wrote, which allows the state to use fuel tax revenue to leverage additional funds from the federal government.

“Foregoing [fuel] tax revenue, even for a short time, will harm the Department’s ability to match Federal dollars and may force road closures during winter storm events if funds aren’t available to get the plows moving,” Flynn wrote.

Zack Wirth, R-Wolf Creek, a member of the Transportation Interim Committee, told MTFP on Wednesday that “every dime” of fuel tax funding “is spent pretty wisely” and a reduction would mean a more difficult and dangerous landscape for drivers. 

“Reducing fuel tax is robbing Peter to pay Paul,” Wirth said. 

There is another patchwork fix available to state government fretting about the current economic landscape, though its efficacy is debated. Lt. Gov. Kristen Juras issued an executive order last week that allows commercial vehicles engaged “directly in agricultural or timber industry operations” to use agricultural, red-dyed diesel — same compound, different color and tax rate — on public roads until Nov. 23. The order comes about a week after President Donald Trump signed his own executive order suspending a federal law that bans the use of red-dyed diesel in vehicles on public roads.

Some agricultural producers told MTFP that the order overlooks logistical obstacles that would hinder red-dye from becoming a more commonplace commodity. Gas stations may only have one pump per station, and might not physically accommodate semi trucks. Increased demand for dyed diesel may also increase the chances of exhausting rural supply chains, said Walt Schweitzer, president of the Montana Farmers Union. And because the legality of driving on public roads with dyed diesel varies by state, truckers might not be able to take advantage of the Montana-specific allowance. Schweitzer also noted that “once you put dyed diesel into a fuel tank, it takes forever to flush that dye out of it.”

Ultimately, he said, the executive order’s impact on affordability was as significant as “pissing on a forest fire.” In the short term, Schweitzer said, relief from high diesel prices would have to come from the federal government. For instance, he said the U.S. could decrease its diesel exports and “pull out of this Iranian war.”

“That’ll solve the problem.” Schweitzer said.