Greenwood officials are proposing new wheel and vehicle excise taxes as state lawmakers weigh a measure that would effectively force communities to adopt them.
A proposed ordinance establishing a municipal wheel tax and a vehicle excise tax was formally introduced to the Greenwood City Council on Monday night. The new ordinance would establish a $40 wheel tax and a $25 vehicle excise tax, effective Jan. 1, 2026. The wheel tax, along with the vehicle excise taxes, will be paid to the Indiana Bureau of Motor Vehicles each year at the time a vehicle is registered. Most residents would not be paying both taxes, as each tax applies to certain types of vehicles.
Residents would not have to pay the taxes to both the city and the county, but rather only the city — so there will be no double taxation. The rates in the ordinance are same taxes that are curently charged by the county, so residents wouldn’t see a change to the tax rates, just to which entity their money is allocated, said Greg Wright, city controller.
The ordinance was introduced Monday, and two more readings will take place before the tax can be implemented. The council could make the last vote by the end of April at the earliest.
It is sponsored by the entire nine-member council, a rare move as ordinances and resolutions before them typically only have one to three sponsors. Council President Mike Campbell, who’s been on the council for more than a decade, remarked it was the first time he’s ever seen the entire council sponsor an ordinance or resolution.
Linda Gibson, council vice president, said the support by the entire council sends a “good message.”
“I think that this sends a good message to our constituents that we are on the same page and that … one group isn’t trying to do something against the others,” Gibson said.
In line with Indiana law, the $40 municipal wheel tax would apply to buses, recreational vehicles, semi-trailers, trailers with a declared gross weight of more than 9,000 pounds, and trucks and tractors with a declared gross weight or more than 11,000 pounds — with exemptions for vehicles that are owned by the government or school buses, for example. The $25 municipal vehicle excise tax would apply to passenger motor vehicles, motorcycles, motor-driven cycles, collector vehicles, trailer vehicles with a declared gross weight of 9,000 pounds or less, trucks with a declared gross weight of 11,000 pounds or less, mini-trucks and military vehicles.
“So from a legal perspective, we would not pay a wheel tax on our personal vehicle, we would pay an excise tax,” Campbell said.
Also under Indiana law, the council cannot adopt only one of the taxes. They have to adopt both, Wright said.
“You cannot charge a tax on the commercial vehicles only. If you’re going to get one, you’re going to charge both,” he said.
The proposed ordinance directly cites the need for the city to be eligible for Community Crossings Matching grants as part of the reason for its drafting. Community Crossings is a state matching grant program program which helps fund local road projects, doubling the money municipalities have for road projects.
House Bill 1461 would require communities over 5,000 to adopt wheel and excise taxes to be eligible for the matching grant program. It also increases the maximum award amount from $1.5 million to $4.5 million for counties with 100,000 or more residents and municipalities with more than 2,000 residents.
Mayor Mark Myers previously said passing the taxes is a “have to” situation because the city relies on Community Crossings Matching Grant to complete road projects.
Currently, Greenwood is eligible for up to $1.5 million a year for Community Crossings, which the city matches. If HB 1461 passes and city doesn’t have the municipal wheel and excise taxes adopted, they would lose out on this funding for road projects, Wright said. The city is using $1.5 million from the grant program and $1.5 million in local funding to complete $3 million of work in the Country Aire subdivision this year.
“It’s a big deal for us to be able to do that level of paving,” Wright said.
Through the county’s wheel and vehicle excise taxes, Greenwood receives about $1.4 million a year. Officials are anticipating that replacing those taxes with municipal taxes may raise more money for the city — about $1.9 million a year, Wright said.
The city would get to keep more of the money raised with the tax because it is the city’s tax, Wright said.
“Any wheel tax or surtax paid within the city of Greenwood will go to the city of Greenwood rather than be split out by the current formula that splits it across the county,” he said.
While HB 1461 has passed out of the House, it has not yet passed out of the Senate and was before the Senate for a committee hearing Tuesday. But Wright is confident it will pass before the end of the session in April.
“The bill itself has complete support from Republican leadership at the Statehouse. It is almost certain it will be passed without any further amendments,” he said. “And in fact, the the General Assembly will be adjourned by April 24 so we believe it will pass well before that.”
The ordinance’s current timeline would put final adoption during the council’s second April meeting, and Wright believes HB 1461 will have passed the House by then. Final passage of the city ordinance could be held beyond this date if this turns out to not be the case, he said.
“But the big thing is, it’s not a net new tax to the citizens. It will just be separating it from the county wheel tax or tax so that we can continue to get those Community Crossings grants,” he said.
Council member Ezra Hill asked about why state lawmakers wanted to restructure the funding. Wright said state lawmakers have said there are multiple options available at the county and municipal levels that have not been taken advantage of for funding, so lawmakers are “trying to encourage” the use of these methods, such as the wheel and excise taxes.
Wright also said, in response to questioning from Gibson, that the city is choosing to try to adopt the taxes now so that they don’t miss out when applying for the next round of Community Crossings funding. Communities would be required by HB 1461 to adopt the tax by June 30 to be eligible.
Resident Randy Goodin asked for clarity on the tax for RVs. While he did not own one, he was concerned about how the ordinance didn’t specify a tonnage. The way he read the ordinance was all RVs would pay the $40 wheel tax regardless of size, giving an example of a small camper.
Wright said he would have to ask the city’s legal department look into what qualifies as an RV, but believed state stature suggested the lower rate.