INDIANAPOLIS — Indiana lawmakers may extend the annual 1-cent increase to the state’s gas tax.
In 2017, Indiana passed a law allowing for a gas tax increase of up to 1 cent per year from 2018 to 2024. But now, an amendment added to House Bill 1050 last week would allow that increase to happen another year, in 2025.
Currently, Indiana’s state gas taxes total 52 cents per gallon. That includes a sales tax determined by the average price of gas in the Hoosier State. The rate changes each month.
“We’ll kind of probably see that go up, typically between now and say, peak summer prices, they tend to rise about 5%,” explained Kyle Anderson, an economist at the IU Kelley School of Business.
Aside from the sales tax, Indiana’s gas excise tax is 33 cents per gallon. Under current Indiana law, that tax has gone up by as much as a penny each year since 2018. The final increase would go into effect on July 1, 2024.
However, the amendment recently approved on the Senate floor allows that increase to happen another year: in 2025.
State data shows the annual 1-cent increase generates around $30 million in revenue.
State Sen. Michael Crider (R-Greenfield) introduced the amendment. In a message late Tuesday afternoon, Crider said it’s meant to close a gap before the next state budget and give lawmakers more time to assess road funding needs.
Crider points out the budget bill creates a road funding task force to focus on the issue and consider the impact of fees from alternative fuel vehicles, which is part of the focus of House Bill 1050.
“The task force will examine our road funding needs factoring in the impact alternative fuel vehicles will have on our road funding formula and it takes us to the next budget cycle,” Crider said.
The bill’s House author, State Rep. Jim Pressel (R-Rolling Prairie), said he’s not sure if that language will stay in the legislation.
He said he believes the current gas tax system is working well, he added.
“How the indexing portion works and the way sales tax and the excise tax are working, we are really keeping pace with where we’re at inflation-wise,” Pressel said.
Meanwhile, State Rep. Greg Porter (D-Indianapolis) said he’s not on board with extending the annual increase.
“We’re sitting around a $4 billion surplus right now,” Porter said.
Porter has been critical of the gas tax and argues it needs overall reform.
“I don’t understand why we want to continue to pile on Hoosiers by saddling them with more taxes,” Porter said. “I don’t care that it’s only one penny.”
The bill now goes into the conference committee process. Lawmakers from both the House and Senate will meet to negotiate a final version of the bill that would then go to both chambers for approval.