TAX FILE: Look for lower taxes on watered-down diesel

If Congress changes Highway Trust Fund taxes this year, it's likely to fold those changes into the bill that will replace the “TEA-21” spending authorization that expires September 30. But the House Ways and Means Committee got off to an early start on one change. In late February, the Committee voted to lower the rate on diesel fuel that's blended with at least 14% water. The rate would have been reduced from 24.3¢/gal. to 19.7¢, reflecting the lower energy content of the blend. The provision was initially included in a package of tax breaks for reservists and National Guard who are mobilized. After growing criticism for loading “Christmas tree” provisions onto a bill meant to help the armed forces, House leaders sent it back to committee. Nevertheless, the “watered down” diesel tax rate is likely to resurface in the TEA-21 replacement bill.