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Red diesel (also called dyed or off-road diesel) is the same fuel as on-road diesel, minus the highway taxes. It is legal and cost-saving for off-road equipment, farming, heating and a few other approved uses, and costly if it ends up in a vehicle that drives on public roads. What Is Red Diesel, and How Is It Different? Red diesel is ordinary diesel fuel with a red dye added at the terminal. The dye does not change how the fuel burns. It is a visible tax marker: it tells inspectors that federal …