Indiana’s Gas Tax Approaches 75 Cents per Gallon — Here’s Why

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With so many forces conspiring to push gasoline prices to historic highs in recent weeks, it’s not like motorists need another reason to pay more at the pump. But in Indiana, that’s exactly what they are getting in the form of a gas tax nearing 75 cents a gallon.

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Beginning in May, drivers in the Hoosier State will pay a gas tax of 74.5 cents a gallon, the Transport Topics website reported. That’s the highest in state history. It also represents a 10% increase from the current tax rate and a mind-boggling 60% jump from May 2021. The Indiana Department of Revenue announced the most recent rate hike on April 20.

The reason Indianans face such a high gas tax is because it includes more than one kind of tax. Indiana is one of 16 states to impose a sales tax on gasoline purchases. Indiana drivers currently pay a sales tax rate of 7%. That rate is based on the average price of gas in the preceding month — and last month’s average was among the highest ever due to the impact of Russia’s invasion of Ukraine.

As Transport Topics noted, the average pre-tax price of gasoline in Indiana during the evaluation period of March 16-April 15 was $3.44 a gallon, leading to a May gasoline sales tax rate of 24.1 cents a gallon. It’s only the second time that number exceeded 20 cents. The first time was this month.

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Indiana also imposes a separate gasoline tax of 32 cents a gallon — up from 18 cents less than five years ago. When you add Indiana’s gas sales tax and gasoline tax together, the total is a little more than 56 cents a gallon. Motorists also pay a federal gasoline tax of 18.4 cents a gallon, leading to total gas taxes in Indiana of 74.5 cents a gallon beginning next month.

Indianans can at least take some solace in the fact that their average gas prices are relatively cheap compared to much of the rest of the United States. In Indiana, the average price this week is $3.921 a gallon, according to AAA. That’s well below the national average of $4.120 and a bargain compared to California’s average price of $5.685 a gallon.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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