Why It Matters
Indiana motorists will save 59.3 cents per gallon at the pump for the next 30 days after Governor Mike Braun suspended both the state’s gasoline sales tax and its 36-cent-per-gallon excise tax. The combined relief comes as gas prices in the state have climbed to $4.76 per gallon, up from $4.14 in April. The move represents the first time in modern Indiana history that a governor has suspended the full state gas tax, even as the state faces $156 million in combined revenue loss from the two suspensions.
What Happened
Braun announced the expanded tax relief Wednesday, May 6, extending his earlier suspension of the 7 percent sales tax on gasoline and adding a new 30-day pause on the state’s excise tax. The governor cited legal authority under state statute regulating transportation during emergencies. In April, Braun had told reporters he lacked authority to suspend the excise tax without legislative approval but has since received different legal guidance.
The sales tax suspension was set to expire May 8. Without the extension, drivers would have faced a sales tax increase to 23.3 cents per gallon for May, up from 17.2 cents in April, due to rising base fuel prices.
Indiana Attorney General Todd Rokita’s office has launched price gouging investigations and sent warning letters to retailers across the state. A spokesperson confirmed the office received more than 150 complaints of suspected price gouging as of Wednesday afternoon.
By The Numbers
The 30-day combined tax suspensions will cost state coffers $104 million and local governments $52 million. Braun’s initial sales tax suspension in April carried a $50 million revenue cost. Despite the relief measures, the state collected $283.7 million through gasoline sales tax in April and remains $425.7 million above fiscal year projections. The governor’s office calculates the tax relief provides a 12.4 percent discount on the average gasoline price in Indiana. State statute allows the governor to suspend provisions regulating transportation during emergencies but limits renewals or extensions to one instance without legislative approval.
Zoom Out
The only previous sales tax suspension on gasoline in Indiana occurred under Governor Frank O’Bannon, but that action did not include the excise tax. Other states have implemented temporary gas tax relief during periods of elevated fuel prices, though suspending both sales and excise taxes simultaneously remains uncommon. The current price surge follows supply constraints from Iran’s blockade of the Strait of Hormuz and refinery outages, including at the BP refinery in northwest Indiana.
Braun also announced an increase to the mileage reimbursement rate for state employees who use personal vehicles for work travel, with details pending confirmation.
What’s Next
The tax suspensions will remain in effect for 30 days from Wednesday. If Braun seeks to extend the relief beyond that period, state law requires approval from the General Assembly. The attorney general’s office will continue investigating retailers for potential price gouging violations during the energy emergency. Market analysts expect fuel prices to remain elevated while supply constraints persist.