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Sales tax on gas drops in Indiana next month

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(The Center Square) – Indiana drivers will see a little relief at the pump starting next week.

The Indiana Department of Revenue has issued a memo announcing the sales tax rate in August for gasoline will be 19.4 cents per gallon. That marks the first time the sales tax on gas has dropped since February.

Before that, Indiana motorists had endured increases over the previous five months on the gas sales tax rate. State officials adjust the rate monthly based on the average retail price.

State officials determined that price to be $2.77 from June 16 to July 15, a more than 15-cent drop from the average price the month before. The state’s formula then calculates the 7% sales tax to the average price and rounds up to the nearest tenth of a penny.

At 19.4 cents, drivers filling up a 16-gallon tank will pay $3.10 in sales tax next month. In February, those same 16 gallons had a total sales tax of $2.75.

Indiana’s sales tax is one of two the state levies on motor fuels. It also imposes an excise tax. That is set at 34 cents, and that penny increase took effect at the beginning of this month.

The excise tax provides a revenue stream for the Indiana Department of Transportation, helping it maintain existing nearly 30,000 lane miles of roads and more than 5,700 bridges, as well as construct new ones across the state.

Of Indiana’s neighboring states, only Illinois has a higher gas tax. The Land of Lincoln raised its rate to 45.4 cents at the beginning of the month, and Illinois also includes its 6.25% sales tax on gas purchases.

Michigan also adds a sales tax of 6% on top of its 28.6-cent gas tax. Kentucky does not impose its sales tax in addition to its 28.7-cent levy on gasoline.

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