Indiana Laws and Incentives for Natural Gas

The list below contains summaries of all Indiana laws and incentives related to Natural Gas.

State Incentives

Natural Gas Tax Exemption for Public Transportation

Natural gas purchased by a public transportation corporation to fuel a vehicle used for public transportation is exempt from the state gross retail tax until December 31, 2017. (Reference Indiana Code 6-2.5-5-27)

Natural Gas Tax Credit

A carrier operating a commercial compressed natural gas (CNG) vehicle on any Indiana highway may claim a credit equal to 12% of the road taxes imposed on its CNG consumption in the previous calendar quarter. The credit is refundable. (Reference Indiana Code 6-6-4.1-1 and 6-6-12)

Special Fuel Tax Exemption

The sale of biodiesel, blended biodiesel, compressed natural gas, and liquefied natural gas used to power an internal combustion engine or motor is exempt from state gross retail tax. (Reference House Bill 1002, 2017, and Indiana Code 6-2.5-5-51 and 6-6-2.5-22)

Alternative Fuel Vehicle (AFV) Inspection and Maintenance Exemption

Dedicated AFVs are exempt from inspection and maintenance requirements if they operate exclusively on natural gas, propane, ethanol, hydrogen, or methanol. (Reference 326 Indiana Administrative Code 13-1.1)

Vehicle Research and Development Grants

The Indiana 21st Century Research and Technology Fund 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 Elevate Ventures 21st Century Fund website. (Reference Indiana Code 5-28-16-2)

Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption

Any motor vehicle equipped with an auxiliary power unit or other idle reduction technology may exceed the gross, single axle, tandem axle, or bridge formula weight limits by up to 400 pounds to compensate for the added weight of the idle reduction technology. Any NGV may exceed the limits by up to 2,000 pounds. (Reference Indiana Code 9-20-4-1)

Diesel Vehicle Retrofit and Improvement Grants

The Indiana Department of Environmental Management (IDEM) administers the DieselWise Indiana grant programs to support projects that reduce diesel emissions. 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.

Laws and Regulations

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)

Special Fuel License Tax

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 (DGE). Compressed natural gas, butane, and propane are subject to a tax of $0.16 per gasoline gallon equivalent (GGE). Beginning July 1, 2017, the tax rate will be determined based on the lesser of the tax rate determined by the special fuel tax index factor of $0.26 per DGE or GGE. From July 1, 2018, through July 1, 2024, the tax rate will be determined each year based on the special fuel tax index factor. The tax does not apply to nominal biodiesel blends of at least 20% (B20); special fuel used only for a personal, noncommercial use and not for resale; and biodiesel used by a biodiesel producer holding an exemption certificate. Other exemptions apply. For more information, see the Indiana Miscellaneous Tax Rates website. (Reference House Bill 1002, 2017, and Indiana Code 6-6-2.5 and 6-6-1.6)

Special Fuel Motor Carrier Fuel Tax

A person who operates a commercial motor vehicle on any highway in Indiana is subject to a surcharge tax on the consumption of motor fuel. The tax rate is $0.11 per diesel gallon equivalent (DGE) for liquefied natural gas or biodiesel and $0.11 per gasoline gallon equivalent (GGE) for compressed natural gas. Beginning July 1, 2017, the tax rate will be determined based on the lesser of the tax rate determined by the special fuel tax index factor or $0.21 per DGE or GGE. From July 1, 2018, through July 1, 2024, the tax rate will be determined each year based on the special fuel tax index factor. For more information, see the Indiana Miscellaneous Tax Rates website. (Reference House Bill 1002, 2017, and Indiana Code 6-6-4.1 and 6-6-1.6)

Clean Vehicle Acquisition Requirements

Each state entity must purchase or lease a clean energy vehicle, unless the Indiana Department of Administration (Department) determines that the purchase or lease of the vehicle is inappropriate for its intended use, or the purchase or lease would cost 20% more than a comparable non-clean energy vehicle. Additional exemptions apply. A clean energy vehicle is defined as a vehicle that operates on one or more alternative energy sources, including the following: a rechargeable energy storage system, hydrogen, natural gas, and propane. Each state entity must annually submit to the Department information regarding its use of clean energy vehicles. (Reference Indiana Code 5-22-5-8.5)

Alternative Fuel and Special Fuel Inventory Tax

Owners of fuel that have title to a fuel storage tank containing propane, biodiesel, blended biodiesel, compressed natural gas, or liquefied natural gas for sale to a motor carrier for highway use in Indiana are subject to an inventory tax. The tax rate is based on the number of gallons of fuel in storage at the close of business on the inventory date, minus the amount of fuel that is below the mouth of the draw pipe. To account for the fuel that will not be pumped, a fuel owner may deduct 200 gallons from the fuel inventory for a fuel storage tank with a capacity of less than 10,000 gallons, and 400 gallons for a fuel storage tank with a capacity of over 10,000 gallons. (Reference House Bill 1002, 2017, and Indiana Code 6-6-4.1 and 6-6-2.5)

Alternative Fuel and Special Fuel Definitions

The definition of alternative fuel includes liquefied petroleum gas (propane). 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 natural gas products, including liquefied and compressed natural gas. (Reference Indiana Code 6-6-2.5-1 and 6-6-2.5-22)

  

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