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Recent Changes in Kerosene Color

As of June 30, 1998, the federal government imposed a tax of 24.4 cents per gallon on all clear, water white kerosene. This was done to help reduce tax cheating by identifying fuel on which Federal excise taxes have not been paid. The government was concerned that clear, untaxed, kerosene was being mixed with clear, taxed, on road diesel fuel, thus avoiding taxes.

Now, kerosene is dyed red at the refinery to distinguish between red, untaxed product and clear, taxed product. The dyed kerosene will work fine in your furnace. If you do receive tax paid purchases of clear kerosene, you can receive a tax credit on your income tax return; use form #4136 if your tax paid purchase was for a nontaxable use.

Retail locations are allowed to dispense clear kerosene tax free if they meet certain government guidelines; however, the guidelines are so strict, that most retailers are selling red kerosene only. Klasen Oil Company has both clear and red kerosene available for delivery. Go Back