INDIANA — Hoosier drivers are facing a steep price surge at the pump as Indiana’s temporary fuel tax holiday officially comes to an end on Thursday.
Beginning Friday, the state will resume collecting both the 7% gasoline usage tax and the 36-cent fixed gasoline excise tax, which have been suspended since early spring under emergency executive action.
The double reinstatement will instantly add 61 cents back to every gallon of fuel sold in the state. With AAA reporting Indiana’s average price for regular unleaded at $3.57 per gallon, the tax resumption will instantly push prices back above the $4.18 threshold across most gas stations overnight.
Why the Tax Suspension Is Ending
The tax freeze was initially implemented in April under an executive order issued by Gov. Mike Braun following global energy market disruptions. By utilizing state emergency powers, the executive branch temporarily suspended the collection of both taxes at the distributor level to deliver short-term financial relief to consumers struggling with inflation and high travel costs.
However, the policy has reached its statutory limit. Indiana law grants the governor the authority to declare energy emergencies and suspend certain revenue collections for up to 120 days. Because that window has now closed, extending the tax holiday any further would require action from the Indiana General Assembly via a special legislative session.
What It Means for Indiana Motorists
For commuters, small businesses, and commercial fleets across Indiana, the end of the tax pause translates directly to higher day-to-day transportation costs:
- Instant Sticker Shock: Filling a standard 15-gallon gas tank will immediately cost about $9.15 more starting Friday.
- Monthly Commuter Impact: For a driver who uses two tanks of gas per month, fuel expenses will jump by roughly $18 to $20 a month overnight.
- No Lag at the Pump: Because fuel distributors will immediately begin accruing taxes on new wholesale deliveries, gas stations are expected to adjust pump prices upward almost as soon as the mandate takes effect on Friday.
The Broader Impact on State and Local Budgets
While the gas tax holiday saved Indiana drivers an estimated $533 million collectively over its four-month run, those savings created a major revenue gap for state and local infrastructure funds.
In Indiana, revenue generated from the gasoline usage and excise taxes is directly dedicated to maintaining highways, repairing bridges, and funding municipal road projects managed by the Indiana Department of Transportation (INDOT) and local county road departments.
To keep local road projects on track, the state plans to utilize Highway Fund reserves to help offset lost revenue for local municipalities. State lawmakers are expected to evaluate potential long-term adjustments to Indiana’s fuel tax structure during the upcoming legislative session.
