INDIANAPOLIS (WRTV) — Indiana Gov. Mike Braun announced on Wednesday a third extension of the state’s gas tax holiday, suspending both the state’s gas usage and gas excise taxes.
The new extension will cover Hoosiers until July 7; this month’s cut-off was originally set for Sunday.
The governor first suspended Indiana's use tax, which is calculated monthly, on April 8. He followed that up on May 6 with another order that suspended the state's other gas tax, the excise tax, which is set once a year. The use tax for June is set at 26.5 cents per gallon, and the excise tax for 2026 is 36 cents per gallon. Braun said suspending those two taxes costs the state about $50 million and $90 million per month, respectively.
"This is a gas savings. It's kind of a lifeline through a tough period like this," he said.
Gas taxes in Indiana remain high because oil prices are still high due to the ongoing war with Iran. Although a ceasefire is in effect, Iranian forces continue to block the Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula through which one-fifth of the world's oil is shipped. Brent crude, which is the international oil standard, has risen back to more than $96 per barrel after falling to $87 per barrel two days ago. The United States is the world's largest oil producer, but oil prices are a reflection of the global supply, which is still constrained.
IU O'Neill School of Public and Environmental Affairs Prof. Paul Helmke said about one-third of the state's gas tax revenue goes directly to local and county governments. In addition, he said part of the state's share ends up in local hands anyway, such as by funding repairs to state highways that run through cities. He said planned projects might face a funding shortage as early as this fall if the gas tax suspensions continue.
"Suspending the tax means that we're going to feel a little bit better at the pump, but we also don't like the potholes and we want our roads fixed, so that's the tradeoff," he said. "It probably won't have too much effect right away because most of the projects that are happening now are ones that have already been funded and planned for."
Indy DPW spokesperson Kyle Bloyd said the excise tax in particular is the primary source of funding for the road funding formula that governs the monthly distribution of state road funding to local governments. He said the suspension has not yet affected any ongoing or planned road projects in Indianapolis. INDOT spokesperson Natalie Garrett said the suspension has not affected any INDOT projects, either. Garrett said INDOT is filling the gap using its own reserves.
Braun said his legal team has concluded he can unilaterally suspend gas taxes for up to 120 days during an energy emergency. He said he has not heard anything to the contrary from the attorney general. Braun said his current order runs through July 7, after which he can suspend the gas tax one more time if he believes it's necessary. The governor said any gas tax suspensions beyond early August will need approval by the General Assembly.
The attorney general has said his office has received 201 price-gouging complaints to date related to gas prices and has issued subpoenas in 30 of them. Fuel taxes are levied before gasoline reaches gas stations, so gas stations can still charge prices that reflect taxes paid on gasoline that was received prior to the governor's original suspension orders.
