Indiana gas tax increases by 10%, making it highest in state history

GARY, Ind. (WLS) -- Indiana just increased its gasoline sales tax by 10%, making it the highest in state history.

Certified nursing assistant Sherice Jones said a fill up that was $30 is now $50 - and even full-time work hasn't rescued her from having to watch every penny.

"I work every day and it is still not helping," she said. "I'm selective at the grocery store. I'm selective with my lifestyle, period. It's serious."

She and the rest of Indiana's drivers are dreading heading to the pumps as a combination of taxes and geopolitics takes away from a traditional Hoosier advantage.

There are three big taxes in Indiana in a gallon of gas: an excise tax of $.32 per gallon, an annual 1 cent per gallon inflation adjustment, and a separate gasoline sales tax.

The sales tax is based on an average of retail prices calculated monthly, most recently from March 16 through April 15 when crude oil prices spiked due to the war in Ukraine. That has pushed the Hoosier gas sales tax to $0.24 per gallon, up 10% month over month. That makes the total gas tax nearly $0.75 a gallon, the highest rate in state history.

"The triple whammy of all of these happening in very close proximity and suddenly it doesn't look so appetizing to cross over into northwest Indiana because you are not saving that much anymore," said Patrick De Haan, a petroleum analyst at GasBuddy.com.

The city of Gary is close to exhausting its 2022 budget for gasoline. In the last year, it has spent $310,000 - and it's only May. For residents, transit and carpooling are being pushed.

"It feels like two steps forward, one step back," Deputy Mayor Trent A. McClain said. "We are currently under the Lake County joblessness rate, but with the gas prices going up, it is harder for people to go to work."

Indiana is one of 16 states - including Illinois and Michigan - where gasoline purchases are subject to sales tax.

According to AAA, the average cost of gas in Indiana sits at $4.04 - with no relief in sight.
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