Indiana Gas Tax Rate: How It’s Calculated
Indiana's gas tax is not a single number but a combination of fixed fees and a variable rate that changes based on statewide fuel prices.
The price of gasoline in Indiana includes several state and federal taxes that are calculated on a per-gallon basis. These taxes are a component of the final cost consumers see at the pump. Each tax is levied differently, contributing to a combined total that funds transportation infrastructure.
The Different Taxes on Indiana Gasoline
The primary state tax on gasoline is the gasoline excise tax. For the period ending June 30, 2025, this tax is set at a flat rate of $0.35 per gallon. On July 1, 2025, the rate is scheduled to increase to $0.36 per gallon. This fixed amount is applied directly to every gallon of gasoline sold within the state, regardless of the retail price.
A second state-level tax is the gasoline use tax, which functions similarly to a sales tax but is specific to fuel. Unlike the fixed excise tax, this rate changes monthly. The Indiana Department of Revenue calculates this tax based on the average statewide retail price of gasoline from the preceding month. For July 2025, the gasoline use tax rate is $0.175 per gallon.
In addition to these state-specific taxes, a federal excise tax is also applied to every gallon of gasoline sold in the United States. The current federal excise tax rate for gasoline is a fixed $0.184 per gallon. This national tax is uniform across all states and is collected by the federal government for its transportation funding.
Calculating Your Total Tax at the Pump
To determine the total tax paid on a single gallon of gasoline, one must combine the three distinct taxes. The calculation is a straightforward addition of the state excise tax, the variable gasoline use tax, and the federal excise tax.
Consider a hypothetical gallon of gasoline with a pre-tax price of $3.00. The first step is to add Indiana’s fixed gasoline excise tax of $0.36. Next, the gasoline use tax must be incorporated; using the July 2025 rate of $0.175, this amount is added to the running total. The final component is the federal excise tax of $0.184 per gallon.
Summing these figures ($0.36 + $0.175 + $0.184) results in a total tax of $0.719 per gallon. When this tax amount is added to the initial pre-tax price of $3.00, the final price at the pump becomes $3.719 per gallon.
How Indiana Uses Gas Tax Revenue
The revenue generated from Indiana’s state-level gasoline taxes is specifically allocated to fund transportation infrastructure throughout the state. The money collected does not go into a general fund but is directed toward specific transportation-related accounts, ensuring the taxes paid by drivers are used to maintain and improve the systems they rely on.
A primary recipient of this funding is the State Highway Fund, which is used for the construction, maintenance, and repair of state roads and highways. Another significant portion of the revenue is distributed to the Local Road and Street Account, which provides funding to counties, cities, and towns for their own transportation projects. These funds support a wide range of activities, from repaving local streets and repairing bridges to managing traffic flow.
The dedicated use of this revenue means that taxes collected at the pump directly translate into improvements in the state’s transportation network. Projects funded by this revenue support the safety and efficiency of Indiana’s roads, and the system creates a direct link between road users and its upkeep.