Indiana drivers grapple with increased gas tax as fuel prices continue to climb

FLOYD COUNTY, Ind. (WDRB) — The price of gas continues to rise — and for drivers filling up in Indiana, it’s about to get even more expensive. Higher pump prices also mean higher gas taxes, due to the way Indiana structures its fuel tax system.

The tax on gasoline in Indiana is layered and, for many drivers, confusing. There are two primary components: an excise tax that changes once a year and a gasoline use tax that adjusts monthly.

The state’s gasoline excise tax is currently set at 36 cents per gallon. That rate is scheduled to increase by one cent in July. On top of that is the gasoline use tax, which functions similarly to a sales tax and is recalculated each month. It’s based on 7% of the average statewide price of gasoline, excluding taxes.

As of April 2, 2026, the total tax on a gallon of gasoline in Indiana is about 71 cents. The gasoline use tax currently accounts for roughly 17.2 cents of that total.

"I don't mind my taxes going to build roads and bridges and do all the things that taxes are supposed to do," said Indiana driver Tony Fiore.

Fiore, who moved to the Hoosier state from Wisconsin, said he’s still adjusting to how Indiana applies its gasoline tax.

"The tax added on to a gallon of gas, I don't know the percentage," he said.

The structure is designed to fund infrastructure. The revenue helps pay for road construction, maintenance and other transportation needs across the state. But as gas prices rise, so does the gasoline use tax, increasing the total cost to drivers.

For residents living near state borders, those higher taxes could influence where they choose to fill up. Some drivers in areas near Chicago, Louisville and Cincinnati may cross state lines in search of lower prices.

For comparison, Kentucky’s gas tax stands at 26 cents per gallon and is adjusted annually.

Fiore recently filled his tank with 20 gallons of gas, paying just under $78. Of that total, about $14.20 went toward taxes. Even with a small discount applied, the tax portion remained significant.

More changes are on the way. Indiana’s gasoline use tax will be recalculated again on May 1, followed by the scheduled excise tax increase in July — meaning drivers could see their costs climb even higher heading into the summer driving season.

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