Indiana gas tax set to increase while state eyes inflation relief

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Indiana will see another increase in state gasoline taxes starting July 1 amid promises of inflation relief—including a proposal to issue direct payments to Indiana residents later this month.

The state’s residents will pay 62 cents per gallon in taxes on gasoline, the state Department of Revenue announced Monday—another jump from June’s record-high 56 cents per gallon. Fuel costs were expected to continue to rise in July.

The gas tax increase emerged alongside calls from Indiana Democrats since March to suspend the tax to help residents reeling from the worst inflation in 40 years.

But Republicans say the gas tax should remain in place to fund the state’s highway construction program and contend that even if the state gas tax was suspended, there is no guarantee that pump prices would be cut by the full amount of the tax. They instead back a plan of gradually lowering Indiana’s individual income tax rate over the next seven years.

Indiana has two taxes on gasoline—a 7% sales tax and a tax directed to infrastructure projects.

The sales tax is calculated monthly and will be set at 29.1 cents for July—up 5.1 cents from June and nearly triple the rate from early 2021.

The road projects tax that’s currently 32 cents a gallon is set to go up by 1 cent in July under an automatic increase for inflation allowed under the 2017 plan pushed by Republicans that boosted the tax from 18 cents to 28 cents.

The state’s average price per gallon of regular gasoline was about $5.13 on Monday, above the national average of $4.98, according to AAA.

President Joe Biden said Monday that he will decide by the end of the week whether he would support suspending the federal gas tax of 18.4 cents a gallon.

Gov. Eric Holcomb, a Republican, proposed an inflation relief plan this month that would distribute payments of $225 to residents under the state’s automatic taxpayer refund law. This builds on the initial $125 payments taxpayers began receiving last month under the same policy.

Holcomb said he’d rather provide relief for all Hoosiers, not just those who buy gas.

Eligible residents would receive a combined total of about $350 in payments, with a married couple filing jointly receiving about $700, Holcomb said.

Holcomb said he would call for a special legislative session before the end of June so legislators can enact the proposal.

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12 thoughts on “Indiana gas tax set to increase while state eyes inflation relief

  1. What does it mean that “the sales tax is calculated monthly”? I would assume that the purchase of gas includes the state’s seven-percent sales tax as well as other state and federal taxes. So when the pump stops at, say, $50 that price includes all applicable taxes which ought not be “calculated” monthly.

    1. Jeff N. – Thanks. Now if only someone can explain to me what this gobbledygook bureaucratic nonsense means:

      “Indiana Code (IC) 6-2.5-3.5 provides for the imposition of a gasoline use tax effective for gasoline purchases on or after July 1, 2014. The gross retail tax otherwise imposed under IC 6-2.5 is not imposed on gasoline sales. Exemptions available to taxpayers under IC 6-2.5-5 (other than the sale for resale exemption under IC 6-2.5-5-8) are also available to taxpayers for gasoline use tax. The Indiana Department of Revenue (DOR) will determine the gasoline use tax rate by calculating a rolling, monthly, statewide average retail price per gallon of gasoline (excluding tax), multiplied by 7%. Due to the calculation process, the gasoline use tax rate may change on a monthly basis depending on the average Indiana retail price of gasoline. DOR will publish the gasoline use tax rate monthly in Departmental Notice #2. The gasoline use tax will be collected when a qualified distributor sells gasoline to a nonqualified distributor. The tax will not be collected when a qualified distributor sells to a qualified distributor or exports the gasoline to another state. The qualified distributor must collect and remit the tax from the nonqualified distributor to DOR. Retail stations should include the gasoline use tax in the pump price of gasoline. Retail stations are reimbursed for the gasoline use tax in the same way they are reimbursed for gasoline or special fuel taxes included in the pump price. The gasoline use tax does not affect form MF-360, and licensed gasoline distributors will need to continue to report and file the gasoline tax return. In addition, the tax does not affect collecting, remitting, or reporting Indiana’s per-gallon gasoline excise tax and per-gallon oil inspection fee.”


  2. Awesome–then they will spend a few million cutting tiny checks to all Hoosiers instead of issuing a tax credit. Why do we constantly re-elect a bunch of idiots? Time to make a change and elect some people who have some common sense about how people are taxed and how those tax dollars are spent.

  3. How any elected official (with a heart/soul or even a pulse) could vote to increase taxes right now is beyond me!! These people are amazing. They actually think we are stupid. Maybe we should find a way to show them how stupid/crazy we are!! Maybe that is all they can relate to!!!!!

    1. +1000. Absolutely stunned the department of revenue is raising gas taxes in Indiana another $0.05 this month. The latest total tax is $0.80/sf in this state!!!

  4. Inflation is the root problem. With record high inflation, the cost of highway construction/ maintenance goes up … so you “get less for more” … regardless of tax revenue. With inflation, when prices steadily increase, someone gets more money. Upstream and midstream oil companies are more profitable … and the government takes in more revenue because X % of “Y + increase” is greater than “X % of Y”. That’s why it is in government’s best interest to promote inflation. THEY GET MORE MONEY. And we have to figure out how to get by with less so they get more. No wonder they have zero concern about their massive corruption and fraudulent spending practices. It’s our money, not theirs. They all need unplugged. Elected and appointed politicians need to be thrown out and replaced with much smaller, more limited government. Readily explains politicians and bureaucrats fevered efforts to eliminate the 2nd Amendment.

    1. Mark H. – “Elected and appointed politicians need to be thrown out and replaced with much smaller, more limited government.”

      And exactly who would take their place? A dictator with lap dogs (i.e., Trump, DeSantis, et al)? Be careful what you wish for.

      And relax, only if 2/3rds of the states ratify and amendment to the 2nd Amendment would it be “eliminated.” That will never happen in our lifetimes. By most of us would like to see a band on semi-automatic weapons. There is no need for a civilian to possess a military-grade weapon that can shoot 100 rounds a minute. Besides, the Supreme Court’s Heller decision only affirmed the individual right to own a handgun for self-defense in one’s own home. Don’t take my word for it…look it up.

    2. I disagree, slightly. Any civilian able to demonstrate competency with a weapon – before purchase and on an ongoing basis – should be able to own it. Competency including not just use of the weapon, but also storage, deescalation techniques, etc. Model the process after what our troops do each year.

      But they shouldn’t be able to buy whatever because 2nd Amendment. With great power comes great responsibility.

  5. Term limits and a severe control on campaign finance would be the best start. No one anticipated that our elected officials would be set for life. Then maybe we will get some sense in the legislature who really care about citizens. Someone noted the small checks coming and they really will not benefit those who are working hard to help their family. Yes, the best answer is adjust gas tax DOWN at least for a period. Then the working people can feed families on their earnings rather than spending more on gas to get to work.
    When will our legislature develop common sense?????