Indiana Gas Tax Relief
Indiana State Board Approves $121 Million in Gas Tax Reimbursements for Local Governments
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Key Points
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Exact reimbursement total and local share: $121,159,722 for the April 8–May 31 suspension period, with local governments receiving $37,834,329.55; funds will be allocated to MVH, LRS, and the Local Road and Bridge Matching Fund, and repayments are expected to hit local accounts within 2–3 days, with all reimbursements completed by Nov. 1.
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Beyond the gas-use tax and gas excise tax suspension, Indiana also implemented a 7% state sales tax on gasoline suspension in April and paused the 36-cent-per-gallon gasoline excise tax in May as part of the relief package.
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State officials estimate the gas tax holiday will forego about $533 million in revenue for the Indiana Department of Transportation and local governments for the duration of the relief period.
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The State Board of Finance’s approval for the reimbursements was unanimous, reflecting a shared priority to keep local governments whole during the energy relief measures.
Indiana's State Board of Finance unanimously approved a $121.16 million transfer to make local governments whole after the state's gas tax holiday cut into road funding, according to Fort Wayne Business. The money covers lost revenue from the April 8 through May 31 suspension period and will hit local accounts within two to three days.
Governor Mike Braun's gas tax holiday suspended both the gasoline use tax and the gasoline excise tax to lower prices at the pump. But that relief came at a cost — the state expects to forego roughly $533 million in total revenue for the full duration of the holiday, WIBC reported.
How the $121 Million Gets Divided Up
Of the $121,159,722 approved, local governments will receive $37,834,329.55, according to Daily Journal. The rest flows into state highway accounts, including the Motor Vehicle Highway Account and the Highway, Road and Street Fund. A third account — the Local Road and Bridge Matching Fund — also gets a share.
The transfers are meant to replace gas tax dollars that would have been sent to local units in June and July. WSBT reported that the state started issuing payments immediately after the board's approval. All reimbursements are expected to be completed by November 1.
Gas Tax Holiday Paused Several Taxes at Once
Indiana's relief package went beyond one tax cut. The state suspended the gasoline use tax in April. Then in May, it paused the 36-cent-per-gallon gasoline excise tax. The state also suspended the 7% state sales tax on gasoline, Fort Wayne Business reported.
Together, those suspensions added up fast. The $533 million in total foregone revenue covers both the Indiana Department of Transportation and local governments. Officials say the relief will not hurt roads or infrastructure because the state is actively backfilling the lost funds.
More Reimbursements Are Already in the Pipeline
The April–May transfer is just the first round. Officials said similar transfers will be pursued for the remaining months of the gas tax holiday, according to Newsbug. The board's unanimous vote signals that lawmakers and the governor's office are aligned on keeping local governments funded throughout the relief period.
Indiana currently reports gas prices below the national average. State officials say the holiday is delivering real savings for Hoosier drivers. Discussions are ongoing about how to handle energy relief for the rest of the suspension period as further reimbursement rounds approach.
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