Indiana Personal Income History

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NOTE: The computation data used on this web page is included in the "Indiana Personal Income History By Calendar Year" table at the bottom of this web page.

The state's Gasoline Tax rate was increased to $0.18 per gallon effective January 1, 2003. Effective 1989, the state's Special Fuel Tax rate was increased to $0.16 per gallon and the state's Motor Carrier Surcharge Tax rate was increased to $0.11 per gallon. It is expected that Indiana House Bill 1002 would increase each of these three fuel tax rates by $0.10 per gallon in Fiscal Year 2018 - the Gasoline Tax rate would become $0.28 per gallon, the Special Fuel Tax rate would become $0.26 per gallon, and the Motor Carrier Surcharge Tax rate would become $0.21 per gallon.

The Fiscal Year 2018 Gasoline Tax rate increase to $0.28 per gallon from $0.18 per gallon would be a 55.6% increase ($0.28 / $0.18 = 1.556). Inflation only increased 30.4% from 2003 through 2016 (CY 2016 CPI / CY 2003 CPI = 240.007 / 184.0 = 1.304). The Fiscal Year 2018 Gasoline Tax rate increase would be 82.9% more than the inflation increase (55.6% / 30.4% = 1.829).

The Fiscal Year 2018 Special Fuel Tax rate increase to $0.26 per gallon from $0.16 per gallon would be a 62.5% increase ($0.26 / $0.16 = 1.625). Inflation increased 93.6% from 1989 through 2016 (CY 2016 CPI / CY 1989 CPI = 240.007 / 124.0 = 1.936). The Fiscal Year 2018 Special Fuel Tax rate increase would be 33.2% less than the inflation increase (62.5% / 93.6% = 0.668).

The Fiscal Year 2018 Motor Carrier Surcharge rate increase to $0.21 per gallon from $0.11 per gallon would be a 90.9% increase ($0.21 / $0.11 = 1.909). Inflation increased 93.6% from 1989 through 2016 (CY 2016 CPI / CY 1989 CPI = 240.007 / 124.0 = 1.936). The Fiscal Year 2018 Motor Carrier Surcharge Tax rate increase would be 2.9% less than the inflation increase (90.9 / 93.6% = 0.971).

Effective the 2019 Fiscal Year, HB 1002 would increase the Gasoline Tax rate, the Special Fuel Tax rate, and the Motor Carrier Surcharge Tax rate each year based on an annual index factor - but, each of the three rate increases would be limited to $0.01 per gallon and the last annual rate increases would be for Fiscal Year 2025. The three annual fuel tax rate increases would be equal to the product of: the rate in effect on June 30 multiplied by the annual index factor with the computed rate increases rounded to the nearest cent ($0.01). The annual index factor would be computed as follows:
STEP ONE: Divide the annual CPI-U for the year preceding the determination year by the annual CPI-U for the year immediately preceding that year
STEP TWO: Divide the annual IPI for the year preceding the determination year by the annual IPI for the year immediately preceding that year
STEP THREE: Add the STEP ONE result and the STEP TWO result
STEP FOUR: Divide the STEP THREE result by two (2)
"CPI-U" means the Consumer Price Index for all Urban Consumers, U.S. city average, all items, using the index base period of 1982-84 equal to one hundred (100), as published by the Bureau of Labor Statistics of the United States Department of Labor. "IPI" means Indiana personal income.

Assuming the Fiscal Year 2018 Gasoline Tax, Special Fuel Tax, Motor Carrier Surcharge Tax rates would become $0.28 per gallon, $0.26 per gallon, and $0.21 per gallon respectively - the Fiscal Years 2019 through 2025 effects of using the annual index factors to increase the three fuel rates can be estimated using actual pertinent data from the past seven Fiscal Years as follows:

Estimated Fiscal Year 2019 Annual Index Factor = Actual Fiscal Year 2011 Annual Index Factor
    Step One: CY 2009 CPI / CY 2008 CPI = 214.537 / 215.303 = 0.996
    Step Two: CY 2009 IPI / CY 2008 IPI = $220,157,359,000 / $225,759,917,000 = 0.975
    Step Three: Step One + Step Two = 0.996 + 0.975 = 1.971
    Step Four: Step Three / 2 = 1.971 / 2 = 0.986 = 1.4% Annual Index Factor DECREASE
    CY 2010 CPI Annual Increase = 1.6% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.28 X 0.986 = $0.276 = $0.28 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.26 X 0.986 = $0.256 = $0.26 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.21 X 0.986 = $0.207 = $0.21 per gallon

Estimated Fiscal Year 2020 Annual Index Factor = Actual Fiscal Year 2012 Annual Index Factor
    Step One: CY 2010 CPI / CY 2009 CPI = 218.056 / 214.537 = 1.016
    Step Two: CY 2010 IPI / CY 2009 IPI = $227,692,069,000 / $220,157,359,000 = 1.034
    Step Three: Step One + Step Two = 1.016 + 1.034 = 2.050
    Step Four: Step Three / 2 = 2.050 / 2 = 1.025 = 2.5% Annual Index Factor Increase
    CY 2011 CPI Annual Increase = 3.2% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.28 X 1.025 = $0.287 = $0.29 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.26 X 1.025 = $0.267 = $0.27 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.21 X 1.025 = $0.215 = $0.22 per gallon

Estimated Fiscal Year 2021 Annual Index Factor = Actual Fiscal Year 2013 Annual Index Factor
    Step One: CY 2011 CPI / CY 2010 CPI = 224.939 / 218.056 = 1.032
    Step Two: CY 2011 IPI / CY 2010 IPI = $242,797,724,000 / $227,692,069,000 = 1.066
    Step Three: Step One + Step Two = 1.032 + 1.066 = 2.098
    Step Four: Step Three / 2 = 2.098 / 2 = 1.049 = 4.9% Annual Index Factor Increase
    CY 2012 CPI Annual Increase = 2.1% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.29 X 1.049 = $0.304 = $0.30 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.27 X 1.049 = $0.283 = $0.28 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.22 X 1.049 = $0.231 = $0.23 per gallon

Estimated Fiscal Year 2022 Annual Index Factor = Actual Fiscal Year 2014 Annual Index Factor
    Step One: CY 2012 CPI / CY 2011 CPI = 229.594 / 224.939 = 1.021
    Step Two: CY 2012 IPI / CY 2011 IPI = $253,770,962,000 / $242,797,724,000 = 1.045
    Step Three: Step One + Step Two = 1.021 + 1.045 = 2.066
    Step Four: Step Three / 2 = 2.066 / 2 = 1.033 = 3.3% Annual Index Factor Increase
    CY 2013 CPI Annual Increase = 1.5% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.30 X 1.033 = $0.310 = $0.31 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.28 X 1.033 = $0.289 = $0.29 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.23 X 1.033 = $0.238 = $0.24 per gallon

Estimated Fiscal Year 2023 Annual Index Factor = Actual Fiscal Year 2015 Annual Index Factor
    Step One: CY 2013 CPI / CY 2012 CPI = 232.957 / 229.594 = 1.015
    Step Two: CY 2013 IPI / CY 2012 IPI = $257,170,310,000 / $253,770,962,000 = 1.013
    Step Three: Step One + Step Two = 1.012 + 1.013 = 2.025
    Step Four: Step Three / 2 = 2.025 / 2 = 1.013 = 1.3% Annual Index Factor Increase
    CY 2014 CPI Annual Increase = 1.6% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.31 X 1.013 = $0.314 = $0.31 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.29 X 1.013 = $0.294 = $0.29 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.24 X 1.013 = $0.243 = $0.24 per gallon

Estimated Fiscal Year 2024 Annual Index Factor = Actual Fiscal Year 2016 Annual Index Factor
    Step One: CY 2014 CPI / CY 2013 CPI = 236.736 / 232.957 = 1.016
    Step Two: CY 2014 IPI / CY 2013 IPI = $266,952,598,000 / $257,170,310,000 = 1.038
    Step Three: Step One + Step Two = 1.016 + 1.038 = 2.054
    Step Four: Step Three / 2 = 2.054 / 2 = 1.027 = 2.7% Annual Index Factor Increase
    CY 2015 CPI Annual Increase = 0.1% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.31 X 1.027 = $0.318 = $0.32 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.29 X 1.027 = $0.298 = $0.30 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.24 X 1.027 = $0.246 = $0.25 per gallon

Estimated Fiscal Year 2025 Annual Index Factor = Actual Fiscal Year 2017 Annual Index Factor
    Step One: CY 2015 CPI / CY 2014 CPI = 237.017 / 236.736 = 1.001
    Step Two: CY 2015 IPI / CY 2014 IPI = $277,628,668,000 / $266,952,598,000 = 1.040
    Step Three: Step One + Step Two = 1.001 + 1.040 = 2.041
    Step Four: Step Three / 2 = 2.041 / 2 = 1.021 = 2.1% Annual Index Factor Increase
    CY 2016 CPI Annual Increase = 1.3% Inflation
    Gasoline Tax Rate = June 30 rate multiplied by annual index factor = $0.32 X 1.027 = $0.329 = $0.33 per gallon
    Special Fuel Tax Rate = June 30 rate multiplied by annual index factor = $0.30 X 1.027 = $0.308 = $0.31 per gallon
    Motor Carrier Surcharge Tax Rate = June 30 rate multiplied by annual index factor = $0.25 X 1.027 = $0.257 = $0.26 per gallon

The estimated Fiscal Year 2025 Gasoline Tax rate increase to $0.33 per gallon from $0.28 per gallon in Fiscal Year 2018 would be a 17.9% increase ($0.33 / $0.28 = 1.179). Inflation only increased 11.9% from 2009 through 2016 (CY 2016 CPI / CY 2007 CPI = 240.007 / 214.537 = 1.119). The estimated Fiscal Year 2025 Gasoline Tax rate increase from Fiscal Year 2018 would be 50.4% more than the estimated inflation increase (17.9% / 11.9% = 1.504).

The estimated Fiscal Year 2025 Special Fuel Tax rate increase to $0.31 per gallon from $0.26 per gallon in Fiscal Year 2018 would be a 19.2% increase ($0.31 / $0.26 = 1.192). Inflation only increased 11.9% from 2009 through 2016 (CY 2016 CPI / CY 2007 CPI = 240.007 / 214.537 = 1.119). The estimated Fiscal Year 2025 Special Fuel Tax rate increase from Fiscal Year 2018 would be 61.3% more than the estimated inflation increase (19.2% / 11.9% = 1.613).

The estimated Fiscal Year 2025 Motor Carrier Surcharge Tax rate increase to $0.26 per gallon from $0.21 per gallon in Fiscal Year 2018 would be a 23.8% increase ($0.26 / $0.21 = 1.238). Inflation only increased 11.9% from 2009 through 2016 (CY 2016 CPI / CY 2007 CPI = 240.007 / 214.537 = 1.119). The estimated Fiscal Year 2025 Motor Carrier Surcharge Tax rate increase from Fiscal Year 2018 would be 100.0% more than the estimated inflation increase (23.8% / 11.9% = 2.000).

CONCLUSION

Most Hoosier individuals who drive motor vehicles pay the state Gasoline Tax at the gas pump. Increasing the Gasoline Tax rate by Indiana House Bill 1002 from $0.18 to $0.28 per gallon would generate $310.3 million additional Fiscal Year 2018 revenue. The Fiscal Year 2018 Gasoline Tax rate increase to $0.28 per gallon would be 82.9% more than the inflation increase since the rate was set at $0.18 per gallon in 2003. 

The state Special Fuel Tax is imposed on diesel, biodiesel, and natural gas products (CNB and LNG) sold or used in producing or generating power for propelling motor vehicles. Increasing the Special Fuel Tax rate by HB 1002 from $0.16 to $0.26 per gallon would generate $118.8 million additional Fiscal Year 2018 revenue. The Fiscal Year 2018 Special Fuel Tax rate increase to $0.26 per gallon would be 33.2% less than the inflation increase since the rate was set at $0.16 per gallon in 1989. 

The state Motor Carrier Surcharge Tax is paid by carriers who operate commercial motor vehicles on any highway in Indiana based on the total amount of motor fuel consumed by the commercial motor vehicles. Increasing the Motor Carrier Surcharge Tax rate by HB 1002 from $0.11 to $0.21 per gallon would generate $91.8 million additional Fiscal Year 2018 revenue. The Fiscal Year 2018 Motor Carrier Surcharge Tax rate increase to $0.21 per gallon would be 2.9% less than the inflation increase since the rate was set at $0.11 per gallon in 1989. 

Effective the 2019 Fiscal Year, HB 1002 would increase the Gasoline Tax rate, the Special Fuel Tax rate, and the Motor Carrier Surcharge Tax rate each year based on an annual index factor - but, each of the three rate increases would be limited to $0.01 per gallon and the last annual rate increases would be for Fiscal Year 2025. The annual index factor would be computed using annual changes in the Consumer Price Index and Indiana Personal Income. 

Annual percent changes in the Indiana Personal Income have been more than the annual percent changes in the Social Security Cost-Of-Living Adjustment in 19 of the 26 years 1990-2015 and 5 of the last 6 years 2010-2015. The Social Security Cost-Of-Living Adjustment was just 0.3% in 2016 and 2017. It would be Taxpayer UNfriendly to use Indiana Personal Income to help compute an annual index factor to increase fuel tax rates each year because the income of Social Security recipients is increasing significantly less than the income of other working Hoosiers - Hoosiers surviving on Social Security cannot afford to pay fuel tax increases based partly on overall Indiana Personal Income, which is increasing significantly more than Social Security Cost-Of-Living Adjustments.

Annual percent changes in the Indiana Personal Income have been more than the annual percent changes in the Consumer Price Index in 19 of the 26 years 1990-2015 and 8 of the last 10 years 2006-2015. It would be Taxpayer UNfriendly to use Indiana Personal Income to help compute an annual index factor to increase fuel tax rates each year because Indiana Personal Income is increasing significantly more than the rate of inflation - and it should not be assumed that the increasing costs of transportation infrastructure improvements must be more than the overall rate of inflation.

The effects of using the annual index factor in HB 1002 to increase the three fuel rates during Fiscal Years 2019 through 2025 can be estimated using actual pertinent data from the past seven Fiscal Years. The estimated Fiscal Year 2025 fuel tax rate increase from Fiscal Year 2018 would be (a) 50.4% more than the estimated inflation increase for the Gasoline Tax, (b) 61.3% more than the estimated inflation increase for the Special Fuel Tax, and (c) 100.0% more than the estimated inflation increase for the Motor Carrier Surcharge Tax. It is apparent that the annual index factor in HB 1002 that would be used to increase the fuel tax rates each year is actually a Taxpayer UNfriendly KEEP-YOUR-GOVERNMENT-FAT & HAPPY Index Factor that would provide additional revenues much in excess of overall Consumer Price Index inflation increases.

THE BOTTOM LINE: The Gasoline Tax, Special Fuel Tax, and Motor Carrier Surcharge Tax are true user fees in that the amount of money you pay as a driver is directly proportionate to the amount of fuel you consume, which is directly proportional to the amount of driving you do. It would be Taxpayer Neutral to increase the three fuel tax rates by $0.10 per gallon in Fiscal Year 2018 and eliminate the proposed subsequent annual rate increases using the Taxpayer UNfriendly annual index factor. The Indiana General Assembly could consider increasing the three fuel tax rates again in about 10 years when increased Gasoline Tax revenues have been offset by overall Consumer Price Index inflation increases.

Watchdog Indiana Home Page Watchdog Indiana Transportation Infrastructure Funding Plan 2017 Transportation Infrastructure Funding Indiana Fuel Taxes History Indiana State Reserves History Indiana State Revenue Forecasts History ACT NOW: Transportation Infrastructure Funding OUTCOME: Transportation Infrastructure Funding

This page was last updated on 05/04/17.