Indiana Gov. Braun Suspends State Gas Tax on Top of Existing Sales Tax Break
Why It Matters
Indiana motorists are facing gasoline prices not seen in years, and Governor Mike Braun has now moved to address the strain with a fuel tax suspension that state officials say is unprecedented in modern Indiana history. The combined relief amounts to 59.3 cents per gallon in savings for Hoosier drivers over the next 30 days.
What Happened
Braun announced Wednesday, May 6, that he is extending the existing 30-day suspension of the state’s 7% sales tax on gasoline and adding a suspension of the state excise tax on fuel — a levy of 36 cents per gallon — for the same period. The sales tax suspension had been set to expire May 8.
The governor cited an ongoing energy emergency as the legal basis for the action. In April, Braun had publicly stated he lacked the authority to suspend the gas excise tax without legislative approval. His office has since received updated legal guidance, pointing to a state law permitting the governor to suspend “provisions of any state statute regulating transportation” during an emergency — language broad enough, his office now concludes, to cover both taxes.
Braun also announced plans to raise the mileage reimbursement rate for state employees who use personal vehicles for work travel, with specifics to follow.
“Making life more affordable for Hoosiers will always be my top priority,” Braun said in a statement. “Suspending both the gas tax and excise tax gives Hoosiers meaningful relief for the next month.”
By the Numbers
- $4.76 — current average price per gallon in Indiana, up from $4.14 when Braun first suspended the sales tax in April
- 59.3 cents per gallon — total savings for drivers under the combined tax suspension
- $104 million — projected cost to state revenue from the 30-day combined tax pause
- $52 million — projected revenue loss for local government units over the same period
- $425.7 million — amount Indiana’s revenues currently exceed fiscal year projections, providing a buffer against the tax suspension’s cost
Price Gouging Concerns
The expanded tax relief comes as Attorney General Todd Rokita’s office confirmed it has launched price gouging investigations and issued warning letters to gas retailers across Indiana. As of Wednesday afternoon, the office had received more than 150 consumer complaints.
However, petroleum market analysts offer a different explanation for the price surge. Patrick De Haan, head of petroleum analysis at GasBuddy, attributed the spike to a confluence of supply disruptions, including Iran’s blockade of the Strait of Hormuz and refinery outages — among them a shutdown at a BP facility in northwest Indiana.
“Everyone is trying to resupply themselves, and there’s just not enough oil to go around,” De Haan said, describing the situation as a “perfect storm” of supply shocks. He noted that many retailers are operating with negligible profit margins because rising oil costs outpace their ability to pass increases to consumers immediately. “They say it’s gouging. This is economics,” he said.
Zoom Out
Indiana’s dual-tax suspension is a relatively rare policy tool. Only former Governor Frank O’Bannon had previously suspended the state’s gasoline sales tax, and he did not extend that action to the excise tax. Fuel price spikes driven by Middle East supply disruptions have prompted similar relief discussions in other states, though few have acted with the same scope as Indiana’s current measures. State law does restrict Braun’s options going forward, specifying that a proclamation of this kind may not be renewed more than once without approval from the General Assembly.
Democratic lawmakers have offered mixed reactions. State Rep. Greg Porter of Indianapolis credited Braun for going further than before, but argued that Republican policy decisions at the state and federal levels bear responsibility for the underlying conditions driving prices higher. Porter also pointed to the state’s roughly $5 billion budget surplus as sufficient to absorb the revenue loss.
What’s Next
The 30-day combined tax suspension runs through early June. Should Braun wish to extend relief beyond that window, he would need approval from the Indiana General Assembly under the state’s emergency proclamation statute. Rokita’s price gouging investigations remain ongoing, with investigators weighing retail pricing against regional comparisons and brand-level benchmarks. Details on the new state employee mileage reimbursement rate are expected to be released shortly. Drivers interested in election and policy accountability measures in Indiana may also watch for legislative responses to the governor’s expanded emergency authority.