Blog · 16 October 2026

North Carolina Gas Tax Holiday: S.L. 2026-62 Motor Fuel Excise Suspension Guide for US CPA Firms

By Keshav Bansal, CA

The North Carolina gas tax holiday is now law. Governor Josh Stein signed House Bill 3, enacted as Session Law 2026-62 (“Relief at the Pump”), on October 9, 2026, and the North Carolina Department of Revenue (NCDOR) confirmed in an October 12 notice that the state motor fuel excise tax suspension sets the rate at zero cents (0¢) per gallon from October 10 through November 30, 2026. The 2026 rate had been 41.0 cents per gallon. For US CPA firms with North Carolina fuel distributors, retailers, trucking or farm clients, returns still have to be filed, sales tax rules were deliberately held in place, and dyed diesel runs on a longer timetable.

What Session Law 2026-62 does

The act was ratified on October 7, 2026, in the First Extra Session 2026 and approved on October 9. Its three tax provisions have three different effective periods, which NCDOR summarizes in a table:

• Motor fuel excise suspension (Section 1): October 10 through November 30, 2026. The suspension covers all motor fuels and alternative fuels taxed under Articles 36C and 36D of Chapter 105, including gasoline and diesel.
• Penalty waiver for farm and agricultural highway use of dyed diesel (Section 2): October 9 through December 31, 2026.
• Excise exemption for dyed diesel used in licensed highway vehicles by certain certificate holders (Section 3): October 1 through December 31, 2026.

Under Section 1(e), monthly “hold harmless” transfers from the Stabilization and Inflation Reserve replace the revenue for the Highway Fund, the Highway Trust Fund and four other funds and accounts. Section 1(c) adds that the suspension period is disregarded when the 2027 rate is calculated under G.S. 105-449.80, the population and energy-CPI formula behind the 41.0-cent 2026 rate.

Zero tax is not zero filing

The single most important compliance line is in Section 1(a): a person who would have had to file a return but for the suspension “must still file a return despite no tax liability accruing on the motor fuel.” NCDOR’s notice goes further. Taxpayers must continue to file all applicable motor fuel returns and motor carrier returns and report all gallons (or gallon equivalents) and applicable miles during the suspension.

So the monthly close does not get lighter. Supplier, distributor and importer clients still need gallon reconciliations by product, and motor carrier clients still need mileage records. A zero-dollar return with inconsistent gallons is still a problem return, and any period covering early October straddles the change.

Sales tax: why the law treats untaxed fuel as “taxed”

North Carolina exempts motor fuel “as taxed in Article 36C” (and alternative fuel taxed under Article 36D) from sales and use tax under G.S. 105-164.13(11). That stops the same gallon bearing both the per-gallon excise and sales tax. A 0¢ rate raised an obvious question: if fuel is no longer “taxed,” does it fall into sales tax?

Section 1(b) answers that. Except for dyed diesel, motor fuel and alternative fuel are considered taxed under Articles 36C and 36D during the suspension for two purposes: deciding whether the fuel is exempt from sales and use tax under G.S. 105-164.13(11), and deciding whether someone used or dispensed non-tax-paid fuel in violation of G.S. 105-449.117, 105-449.118 or 105-449.120(b). NCDOR’s notice confirms that fuel exempt from sales and use tax before October 10 stays exempt during the suspension. Retail clients should not start charging sales tax on clear gasoline or diesel at the pump.

Dyed diesel is the exception. NCDOR states that dyed diesel is generally subject to sales and use tax and that the act created no new sales tax exemption for it, so retailers must keep collecting sales tax on dyed diesel unless they receive the required exemption documentation from the buyer. The suspension also leaves the inspection tax under G.S. 119-18 in place. NCDOR says it must still be reported and paid on the motor fuels excise return, and its 2026 rate announcement keeps that tax at 0.0025 cents per gallon. For a refresher on use tax and exemption documentation, see our sales and use tax guide and our SST voluntary disclosure post.

Pump prices, inventory and the pass-through rule

Section 1(d)(1) says the cost of motor fuel shall not include the suspended tax, so the price per gallon paid by the consumer reflects the savings. Section 1(d)(2) gives retailers a carve-out: no retailer is required to reduce the price per gallon if its cost includes motor fuel excise tax that accrued before the suspension took effect. Retail clients relying on that carve-out will want invoices that separate tax-paid loads from suspension-period loads and a dated inventory count around October 10.

Dyed diesel: farmers, loggers and fishers

Under Section 2, from the act’s effective date through December 31, 2026, the Secretary of Revenue and any designated law enforcement official may not impose civil or criminal penalties under G.S. 105-449.117, 105-449.118, 105-449.118A or 105-449.120(b) against (i) a person who uses dyed diesel for farming or agricultural purposes in a highway vehicle licensed (or required to be licensed) under Chapter 20, or (ii) a person who dispenses dyed diesel into a highway vehicle’s supply tank. “Farming or agricultural purposes” includes crop cultivation, livestock rearing, forestry, aquaculture and related agribusiness activities.

Section 3 goes further for certificate holders. From October 1 through December 31, 2026, no excise tax liability accrues to a person who uses dyed diesel to operate a licensed highway vehicle if NCDOR has issued that person an exemption certificate as a qualifying farmer, conditional farmer, commercial logger, commercial fisherman or wildlife manager. These users must still file a return under G.S. 105-449.90; NCDOR names the form as GAS-1259, Motor Fuels Backup Return. Federal rules for dyed diesel on the highway are separate; see our federal diesel excise tax and EO 14435 guide.

What does not change

The federal excise taxes are untouched. Under 26 U.S.C. §4081(a)(2), gasoline is taxed at 18.3 cents per gallon and diesel fuel at 24.3 cents, each increased by the 0.1-cent Leaking Underground Storage Tank Trust Fund rate. And the state suspension runs only through November 30, 2026. NCDOR says it will publish more guidance and an FAQ, so check its motor fuels page before closing November and December books.

A client checklist for US CPA firms

• Keep every motor fuel and motor carrier return on calendar at 0¢, with gallons, miles and the inspection tax reported as usual.
• Split October activity at October 10, and plan for the suspension to end after November 30.
• Do not add sales tax to clear motor fuel. Keep collecting it on dyed diesel unless exemption paperwork is on file.
• Document inventory that was tax-paid before the suspension if a retailer prices it under Section 1(d)(2).
• For farm, logging and fishing clients, confirm the NCDOR exemption certificate and the GAS-1259 filing.

Where Tax Brew fits

A fuel-tax holiday adds background work: gallon reconciliations, split-period workpapers, inventory cut-offs and zero-dollar returns that still have to be right. Tax Brew provides bookkeeping, cleanup and tax prep support for US CPA firms, with the first 20 hours free for qualifying engagements. Your firm keeps the advice and the sign-off. See our services, or email info@taxbrewglobal.com.

Sources: N.C. Session Law 2026-62 (House Bill 3); NCDOR Important Notice (Oct. 12, 2026), Temporary Suspension of Motor Fuel Excise Tax and Dyed Diesel Enforcement; Office of Governor Josh Stein (Oct. 9, 2026); NCDOR motor fuels tax rate announcements; G.S. 105-164.13; G.S. 105-449.80; 26 U.S.C. §4081; Bloomberg Tax (Oct. 13, 2026). General information, not tax or legal advice.