Hoosier motorists will be paying 74.4 cents per gallon in taxes every time they fill up with gasoline in June, a reduction of 0.1 cents per gallon compared to May.
The Indiana Department of Revenue announced Thursday the state's gasoline sales tax rate next month will be 24 cents per gallon, a 0.4% decrease compared to May's gasoline sales tax rate but 50% higher than June 2021.
Indiana is one of 16 states, including Illinois and Michigan, where gasoline purchases are subject to sales tax. The sales tax rate in Indiana is 7%.
But Indiana does not require gas station operators to recalculate the sales tax they collect from motorists each time the price of gas goes up or down.
\les tax rate — based on the average price of gasoline in the preceding month — that all Indiana filling stations must apply to gasoline purchases for the entire next month.
During the most recent evaluation period, April 16 through May 15, the wholesale price of gasoline remained high, primarily due the oil market impact of Russia's invasion of Ukraine.
According to DOR, the average pre-tax price of gasoline in Indiana during that period was $3.43 per gallon, leading to a June gasoline sales tax rate of 24 cents per gallon.
There's no cap on Indiana's gasoline sales tax rate, so if wholesale gas prices increase the state sales tax rate will go up in tandem.
June will be just the third month in recent years that it's been over 20 cents per gallon following April's rate of 21.9 cents per gallon and May's 24.1 cents per gallon.
Indiana also imposes a separate 32 cents per gallon gasoline tax. As recently as June 30, 2017, the state's gasoline tax rate was just 18 cents per gallon, according to the Department of Revenue.
That year, the Republican-controlled General Assembly, led by state Rep. Ed Soliday, R-Valparaiso, and Republican Gov. Eric Holcomb, hiked the gasoline tax by 10 cents per gallon, and authorized annual 1 cent inflation adjustments through 2024, to fund a massive road construction program.
All gasoline purchases in the United States also are subject to an 18.4 cents per gallon federal gas tax, a rate that has not changed since 1993.
The high state taxes almost certainly ensure gasoline prices in Northwest Indiana will remain at or above $4 per gallon through June unless the pre-tax price of gasoline drops below $3 per gallon, or about 20% less than its current level.
That's prompted Statehouse Democrats to repeatedly call on the governor to convene the General Assembly in special session to temporarily suspend collection of the state's gasoline tax and sales tax on gasoline, a move that could immediately reduce the price at the pump by 56 cents per gallon.
Democrats say with Indiana sitting on a record-setting budget reserve balance of more than $5 billion, the state can easily absorb the estimated $125 million a month cost of suspending the gas taxes to give Hoosier motorists a break.
"The temporary suspension of these exorbitant gas taxes will lead to Hoosiers finally being able to travel again without worries of how they will pay their bills or feed their families," said state Rep. Vernon Smith, D-Gary.
"Many are already struggling with rising rates of inflation — the last thing we need is more financial stress at the pumps. House and Senate Democrats have already paved a clear roadmap for how the Indiana Republican Party can resolve this issue, all they need to do now is find the will to do so."
Holcomb and Republican legislative leaders so far have been mum on the possibility of calling a special session to consider suspending or reducing the state's gas taxes.
Earlier this year, the General Assembly instead approved House Enrolled Act 1002 that on July 1 eliminates the utility receipts tax, a 1.46% charge paid by businesses and consumers on a portion of their electricity, natural gas, water, steam, sewage and telephone bills, and next year cuts the state income tax rate to 3.15% from 3.23% — with the possibility of future reductions to 2.9%.
Most Hoosier adults also recently have received, or soon will receive, an electronic deposit or paper check for $125 as an automatic taxpayer refund of excess state revenue at the June 30, 2021, end of Indiana's prior budget year.
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