Indiana’s Gas-Tax Holiday Ends Aug. 6. What Drivers and Local Roads Face Next

Indiana’s temporary suspension of two gasoline taxes remains in effect through Aug. 6, 2026. After that date, the suspended collections are set to resume unless the General Assembly approves a continuation or replacement policy.

At the same time, the state has begun replacing roadway revenue lost during the suspension. The State Board of Finance voted unanimously on July 21 to approve $121,159,722 for the first reimbursement period, covering collections suspended from April 8 through May 31.

Of that amount, $37,834,329.54 is designated for counties, cities and towns. The remaining money is being returned to related state and transportation accounts rather than paid directly to local governments.

What changes after Aug. 6

Indiana’s Department of Revenue says Gov. Mike Braun’s July 2 energy-emergency update suspended collection of two taxes for different periods:

The Gasoline Use Tax is suspended from April 8 through Aug. 6.
The Gasoline Excise Tax is suspended from May 6 through Aug. 6.

The suspension is temporary. It does not repeal either tax. Unless lawmakers approve another policy, the suspended collections will resume after Aug. 6 under Indiana’s regular tax structure.

Neither tax is separately charged as a retail-level tax at the pump. The Department of Revenue says both are collected at the distributor level. Suspending those collections can reduce the amount reflected in retail fuel prices, although the final price drivers see also depends on fuel-market conditions and other costs.

The Gasoline Use Tax is calculated monthly from the statewide average retail price of gasoline and a 7% rate. Its effect therefore is not a fixed per-gallon amount for every month. The Gasoline Excise Tax is assessed on a per-gallon basis.

How much roadway money has been replaced

The July 21 approval covers the first reimbursement period, from April 8 through May 31. The Comptroller’s Office said the approved $121,159,722 will be reimbursed to the Motor Vehicle Highway Fund, the Local Road and Street Fund, and the Local Road and Bridge Matching Fund.

The official breakdown identifies $37,834,329.54 for local units of government. The balance restores related roadway funds affected by the suspended collections, including accounts that support both state and local transportation needs.

Indiana’s counties, cities and towns receive roadway money through statutory distributions tied to fuel-related tax collections. The first reimbursement is intended to make up for the portion of those collections lost during the initial suspension period.

Regular road distributions are separate

The reimbursement process does not replace or delay Indiana’s normal monthly roadway distributions. The Comptroller’s reimbursement FAQ says regular Motor Vehicle Highway and Local Road and Street distributions will continue on schedule.

Reimbursement amounts for local units are calculated using the same statutory MVH and LRS formulas used for regular distributions. The State Budget Agency determines the statewide impact using Department of Revenue data, and the Comptroller’s Office distributes the money after the State Board of Finance approves each transfer.

That means the first reimbursement is a separate payment process. Local governments continue to receive their ordinary MVH and LRS distributions while the state processes additional payments tied to the gas-tax suspension.

More reimbursements still require approval

The July 21 vote completed the first reimbursement action, but it did not approve all future payments. Additional requests covering later suspension periods must be presented at future State Board of Finance meetings.

The Comptroller’s Office expects all reimbursements to be completed by Nov. 1, 2026, pending those future approvals. That is an expected completion target, not a guarantee that every future transfer is automatic or that all local governments have already received every amount owed.

Local governments should watch for additional Board of Finance actions and payment updates from the Comptroller’s Office. The first transfer was approved July 21; later periods remain part of the pending reimbursement process.

Why Aug. 6 matters

Indiana Public Radio reported that Braun’s current administrative action is the final executive extension of the gas-tax suspension. Further continuation would require action by the General Assembly under the state’s emergency-authority limits.

For drivers, the key date is Aug. 6. The temporary suspension remains in effect through that date, but no further extension is covered by the current orders. Unless lawmakers enact a new policy, the suspended gasoline tax collections will resume after Aug. 6.

For counties, cities and towns, the immediate issue is the timing of separate reimbursements for lost roadway revenue. The first reimbursement has been approved, regular MVH and LRS distributions are continuing, and additional payments remain subject to future State Board of Finance approvals.

Sources

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