Indy drivers are one step closer to paying higher taxes on their vehicles.
A committee of city-county councilors voted 7-3 on June 16 to advance a proposal that would increase local taxes on both passenger and heavy vehicles. The three Republicans on the committee voted against the measure.
It now heads to the full council, which is expected to vote on the increase at its July 6 meeting.
A large contingent of Democrats on the council are pushing for the tax increase in order to access an additional $50 million in annual road funding from the state to fix the city’s badly damaged roads.
The proposal would raise the county vehicle excise surtax to $100 for passenger and light vehicles. Currently, the average resident pays about $20.
It would also increase the county wheel tax, which applies to heavier vehicle classes like buses, RVs and trailers over 9,000 pounds, to $240. The current rate varies by vehicle class from $10 to $40.
Increasing those rates would generate about $71 million a year in revenue.
In 2025, state lawmakers passed a road funding bill that allows Marion County to access an additional $50 million in state road funding so long as they come up with matching funds from new revenue sources.
Mayor Joe Hogsett’s administration hopes to access the funds without raising taxes, but Councilor Andy Nielsen, an eastside Democrat who authored the proposed tax increase, said the “legislative intent” of the bill is to get Marion County to raise taxes.
“This is an all-or-nothing provision: We either get zero dollars from the state, or we receive $50 million from the state,” Nielsen said.
Councilor Josh Bain, a Republican, pushed back on that interpretation of the law.
“We can discuss whether or not we want to raise taxes to get there or cut government spending to get there, but don’t let anyone ever tell you that the only way you can get there is by raising taxes,” Bain said.
Residents have mixed feelings about the proposal. While some see it as a way to fix the city’s infrastructure, others say it’s unfair to raise taxes during a time of economic uncertainty.
Measure likely to pass
Nielsen and 12 other Democrats have sponsored the proposal. That would meet the 13-vote threshold required to pass the full council, which has 25 members.
Hogsett is against the tax hike, saying it “puts the heaviest burden on those who can least afford it,” but it’s unclear if he would veto the measure.
When asked if Hogsett would veto the measure if it gets to his desk, spokesperson Aliya Wishner referred to the mayor’s previous statement, which outlined his opposition but did not indicate whether he would veto it or not.
The council would need at least 17 votes to overrule a mayoral veto.
Upcoming meetingS
Public hearing
The City-County Council will hear public comment on the proposed tax increase.
🗓️ 6 p.m. June 24
📍 Warren Township Schools administration building, 975 N. Post Road
Vote
The council will take a final vote on the proposal.
🗓️ 7 p.m. July 6
📍 City-County Building, 200 E. Washington St.
Hogsett has previously stated that he won’t raise taxes unless the state changes its road funding formula, which disproportionately benefits rural areas.
Democrats at the local and state level have unsuccessfully tried for years to get state lawmakers to change the formula, which doesn’t take into account the number of lanes on a road. That means that a one-mile stretch of multi-lane thoroughfares like Washington Street and Keystone Avenue gets the same amount of money as a one-lane road in rural Indiana.
As a result, Indianapolis has 8,400 lane miles but only receives state funding for 3,400 of those miles.
Hogsett’s plan
Wishner said the Hogsett administration’s plan does not require a tax increase, instead relying on funding already allocated in the 2026 and 2027 budgets, as well as money from stormwater fees and supplemental income tax funding from the state, which arrives each spring and usually falls between $20 and $40 million.
In future years, Wishner said, the city will identify “budget efficiencies and growth” to meet the match.
“This administration has time and time again continued to increase road funding and at the same time receive the highest credit ratings from three out of four ratings agencies,” Wishner told Mirror Indy. “Since 2017, this administration has more than tripled the transportation budget without raising taxes — further underscoring our confidence that the match can be reached without a tax increase on residents.”
Nielsen said the Hogsett administration’s plan to match the $50 million without raising taxes “is not really a plan,” which he also characterized as “a one-year patch.”
“It relies on a source of funding that we cannot count on, on an annual basis,” Nielsen said, referring to the supplemental income tax funds. “We’re not aware of how much we’re getting from the spring fiscal until the springtime …Often there have been times the spring fiscal has been negative. I think it puts this match at risk.”
Councilor Dan Boots, a Democrat who represents parts of the north side, went a step further, calling Hogsett’s plan “a scheme that he hopes you buy.”
If the city fails to come up with the $50 million match in a given year, the matching funds go away permanently.
What’s next
The council will hold another public hearing on the proposed tax increase at 6 p.m. June 24 at the Warren Township Schools administration building, 975 N. Post Road.
The council plans to take a final vote on the proposal at its July 6 meeting at the City-County Building, 200 E. Washington St.
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Peter Blanchard covers local government. Reach him at 317-605-4836 or peter.blanchard@mirrorindy.org. Follow him on X @peterlblanchard.
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