Indiana's Gas Tax Holiday Is Extended Through November 4. Here's What Happens Next.
Update (October 6, 2026): Governor Mike Braun extended Indiana's gas tax suspension again. Under Executive Order 26-33, signed September 30, the Gasoline Use Tax and Gasoline Excise Tax stay suspended October 6 through November 4, 2026, the Governor's office confirmed. The taxes did not come back on October 6.
Indiana drivers have been paying some of the lowest gas prices in the country since April.
That's not an accident — it's a deliberate policy decision that has now cost Indiana's state budget roughly half a billion dollars and counting.
On September 3, Governor Mike Braun extended his suspension of both the state's Gasoline Usage Tax and Gasoline Excise Tax for another 30 days through October 5, 2026. As WBOI reported, the suspension of the 62.5 cents per gallon of taxes has contributed to Indiana having the nation's lowest statewide average pump prices — $3.44 per gallon as of early September, compared to the national average of $4.26.
Indiana has had no gas tax since April. The next decision date is now November 4.
How It Started — The Iran War and a 60-Cent Spike
The gas tax suspension didn't start as a calculated policy experiment. It started as an emergency response.
When President Trump launched military action against Iran in early 2026, global oil prices spiked immediately. In Indiana, the average price of a gallon of regular gasoline surged from $2.68 in late February to well above $4.00 within weeks. The disruption was swift and severe — and politically toxic for a governor who had just taken office promising affordability as his top priority.
Governor Braun first suspended Indiana's Gasoline Usage Tax in April — the 7% sales tax effectively applied to gasoline. He expanded the relief in May to include the state's 36-cents-per-gallon Gasoline Excise Tax as well. The combined suspension removed approximately 62.5 cents per gallon from Indiana pump prices — one of the most significant consumer price interventions a state government has attempted through tax policy.
The early legal question was how long Braun could sustain it. His initial authority came from an energy emergency declaration tied to the Iran conflict — a mechanism that allowed him to suspend the taxes for 60 days, then extended to 120 days. By August, that emergency window was exhausted.
Rather than let the suspension expire, Braun declared a new energy emergency on August 7 — this time citing disruptions to global oil from the ongoing conflict in Ukraine and Canadian wildfires. The new emergency opened a fresh 120-day window. As the Indiana Department of Revenue confirmed, the Gas Use Tax and Gasoline Excise Tax are suspended from August 7 through October 5, 2026 under that declaration.
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The Cost — $140 Million Every Single Month
Half a billion dollars sounds large in the abstract. The monthly math makes it concrete.
The suspensions have meant that the state has spent roughly half a billion dollars to lower costs at the pump so far — spending roughly $140 million each month that taxes are suspended. That's not revenue that was never collected — it's revenue that was already budgeted, already committed to road funding and local infrastructure projects, now being replaced from Indiana's $5 billion reserve fund.
Local governments have been the most vocal in expressing concern. Indiana's gas tax revenues fund local road projects — and when the tax is suspended, those funds disappear. Braun has committed to reimbursing local governments from state reserves — and the Indiana Board of Finance has already approved the first round of those transfers. But the sustainability question is real.
As Indiana Capital Chronicle noted in its ongoing coverage, lawmakers have worried about how much is being spent and how local governments may be impacted as the tax funds local infrastructure projects. Braun's counter — that the state's reserve balance is on track to exceed $5 billion — provides fiscal cover for now. Whether it provides cover through the end of the year depends on how many more 30-day extensions he authorizes.
The Legal Controversy — Can He Keep Doing This?
Indiana's Attorney General Todd Rokita endorsed Braun's August 5 extension — issuing a statement saying nothing in Indiana's emergency powers statutes prohibits the Governor from declaring separate emergencies based upon different factors.
But the legal question is genuinely contested. Braun himself acknowledged in August that he had previously said he would only be able to extend the pause for 60 days — until he found the new energy emergency authority that allowed him to continue. Declaring a fresh emergency with fresh justification each time the old one expires is an approach with real legal limits.
No court challenge had been filed as of this update. But the pattern (April emergency, May expansion, July extension, August new emergency, September and October extensions) shows the governor working at the outer edges of his statutory authority with each order.
What Happens to Gas Prices When the Suspension Ends
This is the number that has been driving Braun's decision-making at every extension point.
Gas prices were expected to surge up to 60 cents in the following days once the taxes were back in place. Indiana's current pump price advantage — $3.44 versus the national average of $4.26 — would effectively disappear the day the taxes resume. The 62.5 cents per gallon that has been suspended would be added back to Indiana pump prices immediately.
For Indiana drivers and businesses with vehicle fleets, that's a significant and sudden cost increase. For fuel retailers, it's a compliance event — the taxes resume at the distributor level, meaning fuel pricing and cost structures need to update on the day the suspension lifts.
As the Indiana DOR confirmed, the Gas Use Tax and Gasoline Excise Tax are collected at the distributor level — not at the retail pump. Gas stations don't remit these taxes directly. But distributor-level costs flow through to retail prices quickly, and fuel retailers need to understand the timing of when their supply costs will reflect the resumed taxes.
What Businesses Need to Know Before November 4
For Indiana fuel distributors: the suspension now runs through November 4. According to the Indiana Department of Revenue, no Gas Use Tax should be collected from retailers April 8 through November 4. No Gasoline Excise Tax should be accrued on gallons received May 6 through November 4. Report these as exempt gallons on your GT-103 and MF-360 filings.
For fleet operators and businesses with significant fuel costs: budget for a possible increase of about 60 cents per gallon after November 4. Braun has said one more 30-day renewal, through December 4, is the last one allowed under the current energy emergency. He has also hinted he won't declare a third emergency.
For fuel retailers: monitor the Governor's office communications closely in the days before November 4. When the suspension ends — whether on November 5 or December 5 — the price change at the pump will be immediate and significant.
For out-of-state businesses selling fuel-related products or services in Indiana: the gas tax suspension has made Indiana's pump prices the lowest in the country and driven meaningful changes in consumer behavior. When the suspension ends, those behavioral patterns will shift again.
Separately, a second order lets farmers and timber harvesters use untaxed dyed diesel in vehicles hauling farm and timber products on Indiana roads, starting September 30, for as long as the energy emergency lasts. Indiana's diesel tax itself remains in effect.
The November 4 Decision
Braun extended the suspension on September 30, and it took effect October 6 with no gap in savings.
He has said he will revisit the order before it expires November 4. One more renewal would carry it through December 4, the final suspension the current emergency allows.
If he extends: the taxes stay suspended through December 4, and the roughly $140 million monthly cost to reserves continues.
If he doesn't: the Gasoline Use Tax and Gasoline Excise Tax return November 5, and pump prices are likely to rise by about 60 cents per gallon.
Beyond December 4, Braun has suggested working with lawmakers on the gas tax structure in the January session instead of declaring a new emergency.
Not sure how Indiana's gas tax suspension, or its eventual end, affects your fuel cost calculations, fleet budgets, or distributor-level compliance? Book a free consultation with our team at sales.tax.
What this means for your business
If your sales into Indiana have grown with prices, you may have crossed the economic nexus threshold without changing anything about how you sell. We’ll tell you where you stand in 30 minutes — and if there’s nothing to fix, we’ll say so.