Indiana lawmakers advance competing tax rebates, fuel tax relief

Indiana state lawmakers are moving forward with multiple plans to provide relief from higher costs for goods and services.

Gov. Eric Holcomb last month called state lawmakers back for a special session to address issues that include tax relief. The session has continued into August.

Both chambers have taken action to approve proposals to provide some relief.

Relief at the fuel pump

The Senate voted 54-40 to advance a bill to cap the state’s 7% sales tax collected on gas purchases through next spring. The state’s excise rates on gas and diesel also would be frozen.

Indiana’s gas sales tax can be adjusted monthly. Change is dependent on the average Indiana retail price for gas.

The bill, SB3, would cap the sales tax at 29.5 cents per gallon through June 30, 2023. However, if the sales tax rate falls below 29.5 cents per gallon during that time, the lesser tax rate would apply.

Indiana’s fuel excise rates also would be stationary through June 2023.

Since July 1, the state collects a 33-cent excise rate on gas purchases and a 55-cent rate on diesel. The rates are up one penny and 2 cents, respectively.

The tax is indexed on an annual basis through 2024.

The Senate-approved bill would revert the excise tax collected to their June 30 rates.

The fuel tax freeze is estimated to reduce state revenue by about $47 million during fiscal year 2023.

SB3 would appropriate $17.7 million from the state’s general fund to make transfers to counties, cities, and towns equal to the amount of excise tax that each locale would have otherwise received if tax rates were not frozen.

The bill has moved to the House Ways and Means Committee for consideration.

Tax rebates

House lawmakers have approved their own plan to provide tax relief. The pursuit follows action taken in May to start sending $125 rebate checks to every taxpayer or $250 to taxpayers filing jointly.

The rebate is a result of the state’s automatic taxpayer refund law. The law directs money back to residents following higher-than-expected state revenue for a fiscal year.

The governor followed suit last month by calling on state lawmakers to use $1 billion of the state’s reserves to provide another tax rebate. He said state reserves allow for the additional boost.

Holcomb said tax rebates are the “fastest, fairest and most efficient to return taxpayers’ hard-earned money during a time of economic strain.”

He is asking for every taxpayer to receive $225.

“A 40-year high national rate of inflation is hitting Hoosiers daily and any tax funds the state holds beyond what is needed to operate state government and address unplanned events should be returned,” Holcomb said in a news release.

The House voted 93-2 to advance the bill, HB1001, to the Senate. LL

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