Several states are continuing to waive fuel taxes and extend moratoria as the economy faces increased costs due to the Iran war. The American Automobile Association (AAA) reports that the national average for regular unleaded gas is now $4.41 per gallon, with diesel at $6.39. A year ago, these prices were $3.16 and $3.71. The Watson Institute of International and Public Affairs estimates households have incurred over $122 billion in extra fuel costs since the conflict began in February.
Indiana Governor Mike Braun announced an extension of the state’s gas tax waiver through November 4. Braun’s initial order declared an “energy emergency” in April, and it has been extended monthly. He also relaxed regulations on dyed diesel usage to aid the agricultural and timber industries.
“The added cost of fuel prices caused by continued disruptions to the global oil supply can make a major difference in our farmers’ success and their ability to put food on the table for their families,” Braun wrote on X.
Indiana’s gas prices average $3.81, up from $3.07 a year ago but below the $5.24 record. Braun first suspended the state’s 7 percent gas sales tax in April and paused the 36-cent-per-gallon excise tax in May, resulting in a 61-cent reduction per gallon for drivers.
About a third of U.S. states have implemented tax relief measures in response to the fuel cost increases tied to the Iran war. Georgia was first to suspend its fuel taxes on February 28, a measure extended by Governor Brian Kemp until October 29.
“Global markets remain unstable and are subjecting Georgians to unpredictable price shocks on basic goods and services, including gasoline and diesel fuel prices,” Kemp stated in an order.
Ohio lawmakers passed a bill for a 90-day gas tax pause, with Governor Mike DeWine supporting the measure despite concerns over Department of Transportation funding.
In states like Alabama, Louisiana, and Texas, governors have pursued targeted tax relief for farmers facing higher diesel costs during peak harvesting season.
Budget Concerns Over Extended Relief
Officials remain cautious about long-term consequences. New York Governor Kathy Hochul highlighted minimal impact from previous gas tax suspensions. Hochul suggested a federal level tax relief, but efforts remain stalled.
South Carolina Governor Henry McMaster opposed suspending the state’s gas tax, citing potential road maintenance funding challenges.
“That’s where most of the state money comes from to build roads. So, if we reduce that tax, we’ll be cutting into that money. I don’t think that’s a good idea, because roads are long-term; this shortage, I hope, is short-term,” McMaster said.
Despite economic impacts, Braun stated Indiana’s tax suspension delivered over a billion dollars in savings, supported by the state’s substantial reserves.
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