Indiana gas tax hike set following GOP extending annual jump

An Indiana agency confirmed Tuesday that the state's gasoline tax will go up by one cent this summer under an annual increase that Republican legislators voted recently to extend by three years.

The inflation-related increase for the fuel tax goes toward infrastructure projects and currently rings in at 33 cents a gallon. That will go up the maximum of a penny to 34 cents a gallon on July 1, the Indiana Department of Revenue said.

That increase has been allowed each July since 2017 when a Republican-sponsored plan boosted it to 28 cents from 18 cents. The annual increase was set to expire in 2024, but it was extended until 2027 with a little-discussed provision included in the state budget bill approved by GOP-dominated Legislature in late April and signed by Gov. Eric Holcomb. 


Republicans rebuffed calls from Democrats last year to suspend state gasoline taxes when pump prices jumped after the Russian invasion of Ukraine. The state gas levy also includes a 7% sales tax that will stand at 20.3 cents a gallon during May.  

Republican House Ways and Means Committee Chairman Jeff Thompson called extending the annual increase a "reasonable" step amid rising construction costs.

"It was just a compromise to look at those increased costs," Thompson said during the last day of the legislative session "Also, as you see the amount of collections are going down, with better mileage and other types of vehicles, it's just to keep the revenue kind of where it's at."