Indiana’s gas tax rises again as drivers wonder where the money goes

LOUISVILLE, Ky. (WDRB) — Starting Tuesday, drivers across Indiana will see a higher gas tax when they fill up. But many residents are left wondering — is that money actually fixing the roads?

Here’s where every gallon of gas goes in taxes:

34 cents to the state excise tax
17.5 cents to the state sales tax
18 cents to the federal gas tax
1 cent to the Indiana oil inspection fee

That totals nearly 73 cents per gallon in taxes. And unlike many states, Indiana has a gas tax that fluctuates, meaning it can go up or down, based on inflation and fuel prices.

Despite the high taxes, some Hoosiers are skeptical they're getting their money’s worth.

“Our roads are terrible,” Brian Ferguson, Indiana resident, sale. “They are rough as crap, yeah, they are very rough.”

A large chunk of Indiana’s road money is consumed maintaining and expanding Interstates 65 and 70, two of the busiest corridors in the state.

Even state lawmakers are questioning if the current system is doing enough.

“Unless the number is trending downward, which it has been over the past couple months," David Ober, with the Indiana Chamber of Commerce and a former state legislator, said.

Ober explained that the sales tax on gas is based on a rolling average of the previous two months. As prices fluctuate, old months drop off and new ones are added to the formula.

The excise tax, meanwhile, can only go up by one cent each year — a cap set by the legislature.

Still, for people like Carol Rice, who regularly fills up multiple vehicles, the rising costs are noticeable.

“This car is usually not too bad — maybe around $40,” Rice said. “If I bring my SUV, it’s going to be $80. And my husband’s diesel truck — that’s $125.”

A single $40 fill-up puts roughly $8 directly into Indiana’s tax coffers.

As more vehicles become fuel efficient or fully electric, the state is collecting less from the gas pump, sparking conversations about new funding models, including toll roads.

“The gas tax is a dwindling resource to fund major road projects,” Ober said. “New finance avenues are needed and being discussed.”

But back at the pump, drivers like Rice aren’t convinced the money is making a difference.

“You would think there would be no potholes or anything like that anymore,” she said. “I mean, with what we’re paying…"

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