Indiana gas tax rising slightly in August despite price drop

Indiana’s sales tax on gasoline will actually rise slightly starting Aug. 1 even though pump prices have dropped more than 11% from a month ago.

A total of 62.4 cents per gallon in state taxes will be charged during August, the Indiana Department of Revenue announced Monday.

That will be up three-tenths of a cent from July’s record-high rate based on the agency’s calculations of statewide average gasoline prices over the past month — despite AAA reporting Indiana’s average price dropping to $4.58 a gallon as of Monday from $5.15 a month earlier.

Republican Gov. Eric Holcomb and GOP legislative leaders have rejected calls from Democrats since March to temporarily suspend state gas taxes to aid residents amid the high national inflation rate.

Holcomb, instead, has asked legislators to approve $225 payments from the growing state budget surplus to all taxpayers during a special legislative session that starts next week.

Indiana has two taxes on gasoline — a 7% sales tax and a tax directed to infrastructure projects.

The sales tax is calculated monthly and has nearly tripled from early 2021. The road projects tax went up by 1 cent a gallon in July to 33 cents under an automatic increase for inflation allowed under a 2017 plan pushed by Republicans.