INDIANAPOLIS (WISH) — The new year will bring Indiana’s lowest gasoline use tax rate in more than two years. 

The Department of Revenue confirms the use tax, which essentially serves as the state’s sales tax on fuel, will fall to 16.7 cents per gallon of gasoline beginning January 1.

That’s a decrease of more than two cents from December, and nearly five cents cheaper than Hoosier drivers paid in October (21.5 cents), the highest rate of 2023.

The January tax rate is the lowest in Indiana since June 2021 (16.0 cents per gallon).

Indiana’s gasoline use tax rate is based on the statewide average price of regular unleaded gasoline in the previous month.

GasBuddy, which tracks gasoline prices nationwide, reports Indiana’s average price for regular unleaded has dropped 98 cents since hitting a peak for the year in mid-August ($3.910/gallon).

The total combined state and federal taxes on a gallon on gasoline in Indiana will be 69.1 cents per gallon effective January 1.