Indiana Governor Suspends All State Gas Taxes for 30 Days Amid Surging Prices

INDIANAPOLIS — Indiana Governor Mike Braun announced on Wednesday, May 6, that he is suspending both the state’s gasoline sales tax and its gas excise tax for 30 days, a significant escalation of tax relief measures aimed at curbing the financial impact of soaring fuel costs on residents and businesses. The move extends a previous 30-day suspension of the state’s 7% sales tax on gasoline, which began on April 8, and adds a freeze on the state’s 36-cent-per-gallon excise tax. The decision comes as the average price for a gallon of gasoline in Indiana reached $4.75, according to AAA, up from $4.13 when the initial sales tax holiday was declared and roughly 20 cents above the national average. For businesses with vehicle fleets or significant transportation costs, this 59-cent-per-gallon reduction offers immediate and welcome relief to operating budgets. However, in our experience, these temporary tax holidays can create a false sense of security. Companies should treat this as a short-term cash flow benefit, not a permanent change to their cost structure. Relying on temporary political measures for financial planning is a risky strategy. The real challenge lies in building resilience against volatile expenses like fuel. This is where proactive financial management becomes critical, moving beyond simple budgeting to sophisticated scenario planning and cost control. Our outsourced CFO services help clients navigate precisely these kinds of uncertainties, ensuring they can absorb shocks and maintain profitability regardless of temporary tax policies. To build a more durable financial strategy, business owners can contact C&S Finance Group LLC at csfinancegroup.com. “Making life more affordable for Hoosiers will always be my top priority,” Braun said in a statement released Wednesday. “Suspending both the gas tax and excise tax gives Hoosiers meaningful relief for the next month.” The combined suspension provides significant savings at the pump. For the month of May, Indiana’s variable sales tax on gasoline, also known as the gasoline use tax, was calculated at 23 cents per gallon. Combined with the fixed excise tax of 36 cents per gallon, motorists will save a total of 59 cents on every gallon of gasoline purchased during the 30-day period. The governor’s office projected this would amount to a 12.4% discount on the current average price of gas in the state. Indiana’s tax structure for gasoline is multifaceted. The excise tax is a flat rate per gallon, while the gasoline use tax is a percentage calculated monthly based on the average statewide price of fuel from the previous month. According to the Indiana Department of Revenue, these taxes are collected at the distributor level, not directly from consumers at the retail pump. The suspension means distributors will not collect the taxes from retailers, with the expectation that the savings will be passed on to consumers. This dual suspension is an unprecedented move in modern Indiana history, according to the Indiana Capital Chronicle. While former Governor Frank O’Bannon once suspended the sales tax on gas, the excise tax was not included. Braun’s action pushes the limits of his executive authority. State law allows the governor to suspend statutes regulating transportation during an emergency, but it specifies that such a proclamation cannot be renewed more than once without the approval of the General Assembly. This 30-day extension marks the second and final one Braun can enact on his own, bringing the total suspension period to 60 days. Any further relief would require lawmakers to convene for a special legislative session. Interestingly, in April, Braun had expressed doubt that he possessed the legal authority to suspend the gas tax without legislative approval. His office has since received new legal advice permitting the broader action. Most of the revenue generated from these taxes is dedicated to funding Indiana’s road and infrastructure projects, raising questions about the long-term impact of the revenue shortfall on state maintenance plans. In conjunction with the governor’s announcement, other state agencies are taking action related to high fuel prices. Indiana Attorney General Todd Rokita’s office has initiated price gouging investigations into fuel retailers across the state, sending warning letters to stations it is monitoring. A spokesperson confirmed the office had received more than 150 complaints of suspected price gouging as of Wednesday. Governor Braun also announced he will increase the mileage reimbursement rate for state employees who use their personal vehicles for work-related travel, with details to be confirmed by his office. The tax holiday is now set to run through early June, covering the high-travel Memorial Day weekend. With the governor’s executive authority on this matter now exhausted, businesses and consumers will be watching both fuel price trends and whether the Indiana legislature shows any inclination to reconvene for a special session to address the issue should prices remain elevated.