Gov. Mike Braun signed an executive order to pause the 7% sales tax on gasoline for 30-days starting immediately. He said it may take a day or more before consumers see a price drop at the pump.
“I am declaring a gas tax holiday to give Hoosiers relief from the pain at the pump from high gas prices. Affordability is my top priority,” Braun said in a statement.
The move comes as gasoline prices in Indiana reached $4 a gallon in late March, as the war in Iran has affected global oil supplies. The average cost of gas Wednesday was $4.13 in the state and $4.16 across the country, according to AAA.
This new pause on sales tax will only affect gasoline, not diesel fuel prices in Indiana.
This 30-day suspension of the state’s gasoline sales tax does not require approval from the state legislature. If Braun wanted to suspend the state’s excise tax related to gas, then that would need approval from the state legislature.
Indiana’s gas excise tax is currently 36 cents per gallon, according to state and federal data.
The gas sales tax is calculated monthly, and the last rate for April showed the gas use tax at 17 cents per gallon, which was a 2-cent jump from March, according to the Indiana Department of Revenue.
According to state law, Braun is able to take emergency actions like suspending certain taxes on gas if he determines there's been a fuel shortfall that justifies the declaration.
Indiana’s gasoline use tax has been rising in recent months, along with global gas prices, as trade has slowed due to the ongoing war with Iran.
Lawmakers respond
State lawmakers voiced their approval of the tax pause on Wednesday, with Senate Republicans saying that addressing affordability issues is a top concern for them.
"Suspending the state tax on gas is a practical, concrete step we can take to save Hoosiers money,” said Sen. Travis Holdman (R-Markle). “Thanks to Indiana's ongoing fiscal discipline, we have the ability to provide this relief for Hoosiers, and therefore we should do it."
While House Democratic leader Rep. Phil GiaQuinta (Fort Wayne) said democrats were supportive of this move, he also pointed to Democrats' previous calls to suspend Indiana’s gas tax which were ignored by then-Gov. Eric Holcomb.
"I want to be clear: House Democrats support this suspension, but Gov. Braun and Statehouse Republicans are only cleaning up a mess that they helped create,” GiaQuinta said in a press release. “Hoosiers are tired of unstrategic and unfocused foreign wars that cost American lives, drive up gas prices and raise the cost of living.”
Braun also praised President Donald Trump for negotiating the ceasefire with Iran for the next two weeks.
“This is big news. You can already see it in the markets. We'll begin to see that peace dividend over time, and there's now clarity in terms of what they're doing. To me, the time was perfect for do it here,” Braun said.
Braun called on Attorney General Todd Rokita to “enforce protections from price gauging by retailers,” according to the release. He said he will reevaluate in 30 days if the sales tax should continue to be suspended.
Contact Government Reporter Caroline Beck at cbeck@wfyi.org.