Indiana Laws and Incentives for Propane (LPG)
The list below contains summaries of all Indiana laws and incentives related to Propane (LPG).
Community Alternative Fuel Vehicle (AFV) Fleet Grants
The Community Conservation Challenge (CCC) program, which the Indiana Office of Energy Development (OED) administers, offers grants ranging from $25,000 to $150,000 for community energy conservation efforts, including projects that deploy AFVs in fleets. Eligible entities include local governments, schools, businesses, universities, and nonprofit agencies. For more information, see the OED CCC website.
Diesel Vehicle Retrofit and Improvement Grants
The Indiana Department of Environmental Management (IDEM) administers two DieselWise Indiana grant programs to support projects that reduce diesel emissions. The Clean Diesel Across Northern Indiana program provides grants ranging from $25,000 to $200,000 for projects in the Gary, Hammond, Michigan City, South Bend, Elkhart, and Fort Wayne areas. The Clean Diesel Across Indiana program provides grants ranging from $10,000 to $75,000 for projects throughout the state. Eligible applicants include private and public entities that operate equipment serving the public, including private bus fleets and sanitation fleets. Eligible projects include replacing or converting a diesel vehicle or vehicle component with one that operates on alternative fuel, as well as installing exhaust retrofit technologies, idle reduction technologies, aerodynamic technologies, and low rolling resistance tires. For more information, see the IDEM DieselWise website.
Alternative Fueling Station Grant Program
The Alternative Fueling Station Grant Program provides grants of up to $20,000 for installing new alternative fueling stations or converting existing fueling stations to dispense alternative fuels. Eligible alternative fuels include liquefied petroleum gas (propane) and compressed natural gas. The Indiana Office of Energy Development must review and approve applications for the grant program, and the grant funding awarded for all fiscal years may not exceed $1 million. No funds are currently appropriated for this incentive (verified May 2013). (Reference Indiana Code 4-4-32.2)
Alternative Fuel Vehicle (AFV) Grant Program
The Alternative Fuel Vehicle Grant Program offers grants to counties, cities, towns, townships, or school corporations to purchase original equipment manufacturer (OEM) AFVs and for the cost of AFV conversions. Qualified entities may receive $2,000 for each OEM AFV purchased, and up to $2,000 for each AFV conversion. Eligible AFVs include dedicated and bi-fuel liquefied petroleum gas (propane) and compressed natural gas vehicles. The Indiana Office of Energy Development must review and approve applications for the grant program, and the grant funding awarded for all fiscal years may not exceed $1 million. The grant program is closed and applications are not currently being accepted (verified May 2013). For more information, see the Indiana Office of Energy Development AFV Grant website. (Reference Indiana Code 4-4-32.3)
Alternative Fuel Vehicle (AFV) Manufacturer Tax Credit
The Indiana Economic Development Corporation (IEDC) may award tax credits under the Hoosier AFV Manufacturer Tax Credit to foster job creation, reduce dependence on imported energy sources, and reduce air pollution resulting from the manufacture or assembly of light-duty AFVs in Indiana. AFV manufacturers are eligible for tax credits of up to 15% of qualified investments, which include expenditures in the state that are reasonable and necessary for the manufacture or assembly of AFVs. To be eligible, the manufacturer must compensate its employees at least 150% of the state's hourly minimum wage and agree to maintain operations for at least 10 years. Additional restrictions apply. For the purpose of this incentive, AFVs are defined as vehicles designed to operate on E85, biodiesel, ultra low sulfur diesel fuel, natural gas, liquefied petroleum gas (propane), hydrogen, methanol, coal-derived liquid fuels, non-alcohol fuels derived from biological material, P-Series fuels, or electricity. IEDC must review and approved applications for this incentive. The credit applies to taxable years beginning after December 31, 2006, and before December 31, 2016. Unused credits may be carried forward for up to nine consecutive taxable years. For more information, see the IDEC Hoosier AFV Manufacturer Tax Credit website. (Reference Indiana Code 6-3.1-31.9)
Vehicle Research and Development Grants
The Indiana Economic Development Corporation (IDEC) administers the Indiana 21st Century Research and Technology Fund, which provides grants and loans to support economic development in high technology industry clusters. Incentives are available for qualified alternative fuel technologies and fuel-efficient vehicle development and production. For more information, see the IEDC Indiana 21st Century Research and Technology Fund website. (Reference Indiana Code 5-28-16-2)
Alternative Fuel Vehicle (AFV) Inspection and Maintenance Exemption
Dedicated AFVs are exempt from inspection and maintenance requirements if they operate exclusively on compressed natural gas, liquefied natural gas, propane, ethanol, hydrogen, or methanol. (Reference Indiana Administrative Code 326 IAC 13-1.1)
Laws and Regulations
Special Fuel Tax
Effective January 1, 2014, certain special fuels sold or used to propel motor vehicles are subject to a license tax. Liquefied natural gas is subject to a tax of $0.16 per diesel gallon equivalent. Compressed natural gas, butane, and propane are subject to a tax of $0.16 per gasoline gallon equivalent. The tax does not apply to biodiesel blends of at least 20% (B20); special fuel used only for a personal, noncommercial use and not for resale; or biodiesel used by a biodiesel producer holding an exemption certificate. Other exemptions apply. (Reference House Bill 1324, 2013, and Indiana Code 6-6-2.5)
Alternative Fuel Motor Carrier Fuel Tax
Effective January 1, 2014, a person who operates a commercial motor vehicle on any highway in Indiana is subject to a tax on the consumption of motor fuel. The tax rate is $0.16 per diesel gallon equivalent for liquefied natural gas and $0.16 per gasoline gallon equivalent for compressed natural gas, butane, or propane. (Reference House Bill 1324, 2013, and Indiana Code 6-6-2.5 and 6-6-4.1-1)
Alternative Fuel Public Transportation Vehicle Tax
Effective January 1, 2014, alternative fuel acquired to power a vehicle used for public transportation for persons or property is subject to the state gross retail tax, except for alternative fuel purchased by a public transportation corporation to fuel a vehicle used for public transportation for persons. This provision expires December 31, 2017. (Reference House Bill 1324, 2013, and Indiana Code 6-2.5-5-27)
Alternative Fuel and Special Fuel Definitions
The definition of alternative fuel includes liquefied petroleum gas (propane), liquefied and compressed natural gas, and combinations of propane and compressed natural gas, not including biodiesel or biodiesel blends.
Special fuel is defined as all combustible gases and liquids that are suitable for powering an internal combustion engine or motor or are used exclusively for heating, industrial, or farm purposes. Special fuels include biodiesel, blended biodiesel, and other alternative fuels.
Certified Technology Park Designation
The Indiana Economic Development Corporation (IDEC) may designate an area as a certified technology park if certain criteria are met, including a commitment from at least one business engaged in a high technology activity that creates a significant number of jobs. The establishment of high technology activities and public facilities within a technology park serves a public purpose and benefits the public's general welfare by encouraging investment, job creation and retention, and economic growth and diversity. High technology activities include advanced vehicles technology, which is any technology that involves electric vehicles, hybrid electric vehicles, or alternative fuel vehicles, or components used in the construction of these vehicles. For more information, see the IEDC Indiana Certified Technology Parks website. (Reference Indiana Code 36-7-32)
Alternative Fuel Vehicle (AFV) Decals
An individual may place alternative fuel into the fuel tank of a motor vehicle only if the vehicle has a valid alternative fuel decal affixed to the front windshield or the individual has submitted an application for a decal within the last 30 days. All heavy-duty AFVs and light-duty AFVs that public or private utilities own require vehicle decals. The cost of the decal varies according to vehicle type and the gross vehicle weight rating. The annual fee may be prorated if the vehicle is newly purchased, registered in Indiana, or converted to operate using an alternative fuel. This requirement is effective through January 1, 2014. For more information, see the Indiana Department of Revenue Fuel & Environmental (Gasoline) Tax Forms website. (Reference House Bill 1324, 2013, and Indiana Code 6-6-2.1-203 through 6-6-2.1-206)
Point of Contact
Fuel Tax Section
Indiana Department of Revenue
Phone: (317) 615-2630