Commentary: Gas tax holiday coming to end at terrible time

by Niki Kelly, Indiana Capital Chronicle
July 24, 2026

Hoosiers are in for a rude awakening in a few short weeks when all of Indiana’s gas taxes return to full price.

Gov. Mike Braun has suspended both the sales tax on gas and the state gas excise tax for months. But he can’t do more unless lawmakers are willing to return for a special session.

That means when the energy emergency expires Aug. 7, Hoosiers will see a huge spike in prices. And it couldn’t come at a worse time.

That’s because the war in Iran has flared up again and global oil prices have spiked. There is no telling when that conflict will end.

I’m sure Braun initially thought the holiday would be a short-term political win. After all, President Donald Trump predicted a brief war — possibly “four or five weeks.”

So, with Indiana gas prices at $4.14 in April, Braun pulled the lever other Republican governors have resisted and suspended the 7% sales tax Hoosiers pay on fuel purchases. Then, he added the state’s 36-cent gas tax to the suspension.

Both breaks were issued and have since been renewed in 30-day increments, even though the law allows 60-day stints.

I calculated that the holiday has saved me around $100, which is not insignificant. Others with larger gas tanks and less fuel-efficient vehicles saved even more.

Governor announces final extension of gas tax breaks; further action to require legislation

But we’re going to be right back where we started, soon — paying more than $4 a gallon for gas once you add back the current 61 cents in savings. But now, state coffers will be more than $500 million lighter, and Indiana will have fewer options in the future.

“I knew we could replenish the locals, and they’ll get every penny, and what was going to go to the state as well. That’ll be another, you know, use of our surplus,” Braun said this week. “I can tell you, 49 other states wish they had that gas tax holiday, and that goes back into what the most important issue is. I’m dealing with is affordability, and that’s from property taxes to gas prices to owning a home, utility rates, you name it.”

The governor said he will think about a special session but lawmakers would need to be on board to continue the energy emergency.

Instead he said to concentrate on the “reprieve” given to all Hoosiers as “good news.”

After speaking with several GOP legislators, it’s clear a special session isn’t even on the radar.

Why? They aren’t generally popular with the public due to the added cost. And we are coming up on prime election season with 126 state legislative seats up for grabs.

But the big reason is the long-term negative consequences. That money pays for Indiana roads and bridges at both the state and local levels. While you can debate the quality of roads depending on where you live, there is no doubt that taking that funding away would cause harm.

That’s a big reason few other governors have jumped on the bandwagon to suspend these taxes. Georgia Gov. Brian Kemp authorized a two-month hiatus in the spring.

“We cannot do that forever and ever,” he said before he allowed it to expire.

Congress also hasn’t considered the option. Drivers nationwide pay federal motor fuel taxes, too, which partly support federal highway funding.

Gas taxes are a necessary evil, which is why I roll my eyes a little when people talk about eliminating Indiana’s gas tax entirely.

It brought in more than $1 billion in fiscal year 2025. On top of that, the sales tax added another $570 million. You can’t just eliminate billions in infrastructure funding without seeing roads crumble and bridges fall.

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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.