INDIANAPOLIS — Drivers taking advantage of better driving weather will see higher gas prices at the pump.
The Indiana Department of Revenue recently published the gasoline use tax calculation for April. The calculation shows the rate starting April 1 will be 19 cents, up from 18.6 cents in March.
While the gasoline use tax will be slightly higher month over month, it will remain lower year over year. In comparison, the gasoline use tax in April 2022 was 21.9 cents.
The department calculates the gasoline use tax by taking the average retail price per gallon of gasoline in the prior month and multiplying it by the state retail tax of .07 cents. The state said the average retail cost was $2.7082.
While the gasoline use tax has seen decreases in recent months, the tax has increased steadily since it reached its lowest point on record in June 2020.
In addition to the gasoline tax, people buying gasoline pay additional state and federal taxes. As of July 2022, people pay 33 cents per gallon in gas excise tax, which goes towards infrastructure projects, and a federal tax of about 18 cents per gallon.
Indiana has one of the highest gas excise taxes in the country. Only 13 states have a higher gas excise tax than Indiana, according to data compiled by IGEN. However, both the neighboring states of Ohio and Illinois have higher gas excise taxes.
If the average retail cost of gasoline remains at $2.7082 in April, people would end up paying around $3.40 at the pump. As of March 24, AAA reports the average cost of gas in Indiana is about $3.42.
“We may be seeing a return to seasonal trends in demand with warmer weather and longer days,” said Andrew Gross, AAA spokesperson, “But waffling oil prices could mitigate any increase at the pump for now.”
AAA reports that fears of a recession caused global oil prices to hover near $70 a barrel, mitigating a rise in gas prices. These fears were linked to the banking sector amid the high-profile takeovers of Signature Bank and Silicon Valley Bank by US authorities.
Despite the downward pressure on oil prices that concerns over banking and recession are having, GasBuddy reports that it may be temporary in nature and unlikely to be a long-lasting trend. Should the outlook for the banking sector improve, we could see gasoline prices race higher.