Under current law, dyed diesel fuel (dyed diesel) is exempt from the state sales and use tax if it is:
- Subject to the state special fuel excise tax;
- Used to operate a farm vehicle on a farm or ranch; or
- Used for an industrial purpose.
So, dyed diesel that is exempt from the state special fuel excise because it is not used to power a motor vehicle on the state highways, but not used to operate a farm vehicle or used for an industrial purpose, is subject to the state sales and use tax. Section 1 of the bill exempts these remaining sales and uses of dyed diesel from the state sales and use tax. This exemption automatically applies to statutory municipalities and counties. Section 2 specifies that the sale, storage, use, or consumption of dyed diesel is exempt from the sales and use tax imposed by a home rule municipality or county.