Braun adds Indiana gas tax suspension on top of sales tax break

by Mackenzi Klemann and Niki Kelly, Indiana Capital Chronicle
May 6, 2026

Gov. Mike Braun not only extended the suspension of the sales tax on gasoline another 30 days Wednesday — he paused the state gas tax, as well.

The latter is 36 cents per gallon, meaning Hoosier motorists will save 59.3 cents a gallon for the next month.

“Making life more affordable for Hoosiers will always be my top priority,” Braun said Wednesday. “Suspending both the gas tax and excise tax gives Hoosiers meaningful relief for the next month.”

The move is unprecedented in modern history — only Gov. Frank O’Bannon suspended the sales tax on gas previously. But he did not extend that to the full gas tax.

Meanwhile, Attorney General Todd Rokita’s office says it has initiated price gouging investigations into retailers across the state and sent warning letters to stations it is monitoring amid the energy emergency.

A spokesperson said the office received more than 150 complaints of suspected price gouging as of Wednesday afternoon.

The 30-day tax suspensions, combined, are expected to cost state coffers $104 million and local units $52 million. Braun’s initial 30-day suspension of the 7% sales tax on gasoline came at a separate $50 million revenue cost.

The state still collected $283.7 million through the gasoline sales tax in April, and is $425.7 million above fiscal year projections, according to the governor’s office.

The current 30-day sales tax suspension was set to end May 8.

Braun said the energy emergency will give Hoosiers a 12.4% discount on the average price of gasoline in Indiana.

When Braun took action in April, the average cost for a gallon of gas in Indiana was $4.14, according to AAA. That price has now risen to $4.76.

Braun also announced Wednesday that he will increase the mileage reimbursement rate for state employees who utilize their own vehicles for work-related travel. Details on that increase will be shared once confirmed by the governor’s office.

Legal authority

In April, Braun told reporters he didn’t have the legal authority to suspend the gas tax without legislative approval. But he clearly received new legal advice.

The law allowing the action allows him to suspend “provisions of any state statute regulating transportation” and doesn’t mention either tax explicitly.

“The governor may not renew or extend a proclamation more than once without approval of the general assembly,” it says.

Rep. Greg Porter, D-Indianapolis, said he is “thankful that Braun is no longer hiding behind legal precedent and has suspended the gas excise tax. Gas prices hit $4.99 here in Indy. Republicans, both state and federal, are responsible for this mess. Hoosiers shouldn’t suffer financially from their decisions. Now, people will get some actual savings at the pump instead of a handful of change.”

He added the state can “cover our losses with our $5 billion surplus. Indiana doesn’t need any more tax revenue; what this state needs is for people to keep more of their paychecks. ”

Without Braun’s move, drivers would have seen the sales tax on gas go up to 23.3 cents per gallon in May.

Each month, the Indiana Department Revenue averages the prior month’s gas prices (excluding taxes) and comes up with a sales tax rate to be added to every transaction.

For April that amount was 17.2 cents. But higher prices pushed that up for May.

Hoosiers worry about price gouging

News of Braun’s expanded gas tax suspension was met with skepticism online after a surge in fuel prices last week, leading some Hoosiers to suspect that retailers are price-gouging drivers.

A spokesperson for Rokita confirmed that the office has initiated price-gouging investigations and sent warning letters to retailers it is monitoring.

Investigators consider several factors like retail price, as well as comparisons to nearby stations and stations of the same brand.

Market analysts say the surge in prices is predictable due to supply constraints from Iran’s blockade of the Strait of Hormuz and refinery outages, including the BP refinery in northwest Indiana.

“Everyone is trying to resupply themselves, and there’s just not enough oil to go around and that’s pushing prices up,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

De Haan called it a “perfect storm” of supply shocks.

He said many retailers are experiencing negligible profit margins due to rapid increases in the cost of oil since the U.S. entered war with Iran, which stations cannot pass on to consumers right away.

“It’s almost nothing right now,” he said, “because retailers are struggling to keep up with the increases as well, such as the case last week, where I had a full two days that I was able to tell people that we’re going to see figure shock, and then it hit because stations generally can’t pass along increases (to consumers) for two to three days.”

De Haan said consumer prices come down slowly as the cost of oil declines, because retailers need to offset losses accrued when oil prices were up.

“They say it’s gouging. This is economics,” he said.

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Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.