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Indiana gas tax increasing as gas prices rise nationally

By Kayan Tara

Posted May 17, 2022

Gas prices continue to rise nationally, with an average of $4.522 a gallon in Indiana

(Screenshot from AAA Website)

As gas prices increase nationwide, the Indiana sales tax on a gallon of gas also increases, this month by more than 10%.

The current average price in Indiana is $4.522 per gallon today, almost a 60-cent increase from $3.923 a month ago, according to the American Automobile Association (AAA). Gas taxes, highest in the state’s history and the 5th highest in the country, are at nearly 75 cents a gallon.

Indiana residents pay three taxes on a gallon of gas: an excise tax of 32 cents per gallon, an annual 1 cent per gallon inflation adjustment, and a separate gasoline sales tax. Gas sales tax has gone up 24 cents per gallon, over 10% month over month, when crude oil prices rose due to the war in Ukraine.

If sales tax, state gas tax and the federal tax are combined, State Rep. Justin Moed (D-District 97) notes people are paying 75 cents per gallon on top of existing gas prices.

“Anytime that there is an automatic increase of a tax that's going on, it certainly [should be] voted on every year,” Moed said. “I don't think that we should have tax increases that happen just because.”

State Rep. Cherrish Pryor (D- District 94) says the gas tax increase comes at the worst possible time. She hopes a decision on suspending the tax will occur during a special or technical session day.

Pryor notes that, while the gas tax is meant to help fund road projects, the State of Indiana has a $6 billion surplus, and some projects can move forward without requiring people to pay the gas tax.

“There's no reason why the State of Indiana shouldn't step up to the plate and help people,” Pryor said. “I would hope that the governor and the Republicans would get on board [to say,] ‘we're going to suspend this tax credit’.”

The national average gas price, $4.52 today, is attributed to the high cost of crude oil, hovering near $110 a barrel. Indiana is one of 16 states where gasoline purchases are subject to sales tax.

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