Gas Taxes in Indiana

1 Mar

AGas Prices week ago I wrote about some potential changes in legislation to the way in which gas taxes are allocated to local governments for road construction and maintenance (Counties Agitate for Increased Road Funding). Since then I have received several questions about what exactly comprises the taxes paid on gasoline (and diesel) in Indiana, so I thought I’d explain how gas taxes work in Indiana.

Calculating the Gasoline Tax

In Indiana, the price that you pay at the pump for a gallon of gasoline consists of 4 elements:

  • The retail price of the fuel
  • 7% Indiana retail sales tax on the retail price of the fuel
  • 18.4c per gallon Federal gas excise tax
  • 18c per gallon Indiana gas excise tax

Just as an example, consider the gas that I paid $3.85/gallon for this morning. That price at the pump consisted of:

Retail Price  $3.260
Federal Tax  $0.184
Indiana Gas Tax  $0.180
Sales Tax (7%)  $0.228
Total  $3.85

At this particular price, taxes comprise 15.4% of the  total price paid at the pump. Since the federal and state excise taxes on gasoline are charged per gallon (rather than ad valorem, or based on the price of the gasoline), taxes comprise a smaller percentage of the overall price paid per gallon the higher the price of the gasoline.

The 18c per gallon Indiana gasoline excise tax has been the same since 2003. The 18.4c per gallon Federal gasoline excise tax has remained the same since 1993!

Calculating the Diesel Tax (for Motor Carriers)

The taxes on diesel fuel, primarily used by motor carriers (trucks), differ in rate in Indiana, but also include an additional charge: a Motor Carrier Surcharge Tax. The total price paid consists of the following components:

  • The retail price of the fuel
  • 7% Indiana retail sales tax on the retail price of the fuel
  • 24.4c per gallon Federal diesel excise tax
  • 16c per gallon Indiana excise tax (as opposed to 18c for Indiana)
  • 11c per gallon Motor Carrier Surcharge Tax (paid quarterly by the carrier)

Here is a pricing example for diesel:

Retail Price  $3.260
Federal Tax  $0.244
Indiana Gas Tax  $0.160
Surcharge  $0.110
Sales Tax (7%)  $0.228
Total  $4.00

The diesel excise tax and the motor carrier surcharge tax has been the same since 1998. Note that the 11c per gallon Motor Carrier Surcharge Tax is paid to the state quarterly by the carrier.

With this particular example, using the same retail price as with gasoline, the taxes on diesel make up 18.5% of the total price paid at the pump — making diesel in Indiana more heavily taxed than gasoline. This is true in most jurisdictions, primarily because diesel is primarily paid by motor carriers rather than individuals, and thus is less unpopular politically.

Tomorrow, I’ll put out some data comparing Indiana gas taxes to those in other statues. Hint: our gas taxes are among the highest in the nation!

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2 Responses to “Gas Taxes in Indiana”

Trackbacks/Pingbacks

  1. Gas Taxes in Indiana, Part 2 | in53 - MoCoGov - March 2, 2013

    […] I posted about how gas taxes in Indiana were calculated (Gas Taxes in Indiana). As promised, today I wanted to share some data about how Indiana’s fuel taxes (both […]

  2. How much are fuel taxes? Is now “perfect” time to raise them? | My USA Government - December 17, 2014

    […] Monroe County Indiana County Council member presents a clear picture of state excise taxes on gasoline and diesel fuel and also, as of 2013, how some state fuel tax was diverted from road construction and maintenance […]

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