Vehicle tax hikes are en route to Indianapolis after the City-County Council overruled Mayor Joe Hogsett’s veto of the controversial policy by a razor-thin margin on Aug. 10.
Seventeen council Democrats asserted their will over Hogsett’s to approve hefty tax increases that drivers will pay when registering their vehicle each year starting in 2027. The higher taxes are expected to generate more than $70 million in revenue annually and help secure $50 million in additional state funding for years to come, all to be used to repair the city’s ailing road infrastructure.
Two Democrats who initially voted against the tax increases on July 6, Frank Mascari and Brienne Delaney, flipped their positions to give the council the two-thirds majority required to override a mayoral veto. Dozens of people who filled the council chambers stood and applauded as their elected officials approved the higher taxes on them in a 17-7 vote.
“I was a no vote almost all the way until today,” Mascari said. “People need to understand the Statehouse is directing this. They’re sitting on $6 billion and they’re forcing [more than 30] schools to do referendums right now. So the next time you vote, Indiana, think hard.”
Issuing his first veto July 16 to try to kill the tax hikes, Hogsett said increasing taxes on passenger vehicles from an average of $20 to a flat fee of $100 would overburden lower-income households. The city’s top Democrat also argued higher taxes weren’t necessary to muster $50 million in 2027 to send to a state matching-grant program.
The council’s five Republicans and two of 19 Democrats, Ron Gibson and Crista Lee Wells, sided with Hogsett against the tax hikes. One council seat is vacant after Republican Josh Bain stepped down late last week to serve on the Indiana Utility Regulatory Commission.
“I don’t think that the Statehouse pinned us in any way. We had options to not raise taxes and instead we did the easiest thing that we could do and they raised the taxes,” Council Minority Leader Brian Mowery, a Republican who voted no, said after the meeting. “Let’s remember that next year when we’re going to vote, know that [Democrats] raised your taxes and made it harder for you to make it day to day.”
Most council Democrats, however, rejected the mayor’s thinking as short-sighted. Without the tax hikes, they said the city could miss its shot to invest hundreds of millions of new dollars into roads.
New state laws require the city to contribute an escalating amount, starting at $50 million in 2027 and rising to $100 million by 2031, to a matching-grant program to receive $50 million a year in additional road money. The Hogsett administration celebrated the state’s changes in early 2025, saying the new dollars would help make amends for a state formula that city leaders say underfunds urban roads with more lanes and traffic.
The legislation also gave Indianapolis the chance to increase its vehicle excise surtax on passenger cars to $150 and its wheel tax on larger vehicles like semi-trucks, buses and recreational vehicles to $240. The council opted to increase the fee to $100 each year for passenger vehicles while forcing larger vehicles to pay the maximum fee of $240.
“These were not easy decisions, and we recognize the financial impact they can have on families,” Council President Maggie Lewis said in a statement. “At the same time, doing nothing would have put significant state matching dollars at risk and left Indianapolis without a sustainable plan to address our growing infrastructure needs.”
Under state law, all of the excise surtax and wheel tax revenue must be used only “to construct, reconstruct or repair curbs, sidewalks, streets and roads” in Indianapolis. Combined with the state’s annual match and other city dollars set to be budgeted toward transportation, council Democrats say their plan will bring an estimated $855 million toward Indianapolis roads from 2027 to 2031.
While that’s a major windfall, a 2022 report found the city needs an additional $1 billion every year to build up and maintain its roads, bridges and sidewalks. The city’s entire annual budget in 2026 was $1.7 billion.
(This story was updated to add a statement from the council’s top Republican.)
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Email Indianapolis City Hall Reporter Jordan Smith at JTSmith@indystar.com. Follow him on X @jordantsmith09 and Bluesky @jordanaccidentally.bsky.social.
This article originally appeared on Indianapolis Star: Vehicle tax hikes are coming as Indy council overrides Hogsett veto
Reporting by Jordan Smith, Indianapolis Star / Indianapolis Star
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By Jordan Smith, Indianapolis Star | USA TODAY Network
