Candace BarnetteIndiana has become the first state to authorize tolling on all its interstate highways after the governor signed legislation giving transportation officials the authority to seek federal waivers for tolls without further legislative approval.
The new law, signed by Gov. Mike Braun, authorizes the Indiana Department of Transportation to seek federal waivers to implement tolls on any interstate highway without requiring additional approval from the state.
Officials can now pursue tolling under the new law, but they still need federal waivers before tolls can actually be implemented.
State legislators who supported the bill argue that traditional revenue sources are not keeping up with road infrastructure needs. The state typically relies on gas taxes to fund maintenance and new construction costs.
With the rise of electric vehicles and more fuel-efficient options for commuters, states are seeing a decline in gas tax revenue. This is a driving factor for states like Indiana to explore additional revenue streams.
Additionally, the bill creates a new state income tax credit for private investments in railroad infrastructure. Businesses and investors can claim credits for qualified railroad expenses and investments in new rail infrastructure, though credits are capped to control economic impact.
State officials anticipate these investments will strengthen rail transportation and limit wear and tear from freight on state highways.
Beyond tolling, the legislation affects local governments directly. Counties gain new revenue tools such as higher tax rates when those taxes go toward road projects. It also lowers the requirements for the state’s road and bridge matching program, opening up more funds for counties that traditionally struggled to meet the threshold.
Beginning in 2026, the bill also implements several performance-based provisions meant to hold counties responsible for project success. If quality standards aren’t met, such as pavement inspections, local governments could see a reduction in state funding. The goal is to expand funding opportunities for road improvements while ensuring counties deliver quality results on their projects.
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