IndianaHB 1461First Regular Session 124th General Assembly (2025)HouseWALLET

Road funding.

Sponsored By: Jim Pressel (Republican)

Signed by Governor

Summary

Makes various changes to provisions concerning roads and transportation. Allows a taxpayer to claim a credit against state income tax liability for certain qualified railroad expenditures and qualified new rail infrastructure expenditures. Specifies the amount of the credit. Limits the total amount of credits that may be allowed in a state fiscal year and provides for the expiration of the credit. Increases the maximum rate a county containing a consolidated city (consolidated city) may impose for the county wheel tax and the county vehicle excise tax and specifies the purposes for which the proceeds of those taxes must be appropriated. Beginning in 2026, lowers the percentage of funds distributed to counties, cities, and towns (local units) from the motor vehicle highway account that must be used for construction, reconstruction, and preservation of a local unit's highways if certain conditions related to pavement quality are satisfied. Amends provisions pertaining to the Indiana finance authority's authorization to issue revenue bonds or notes, including grant anticipation revenue bonds or notes, to finance highway and road construction projects. Allows the Indiana department of transportation (department) to submit a request to the Federal Highway Administration for a waiver to toll lanes on interstate highways. Provides that, if a request for a waiver to toll lanes on interstate highways is granted, the general assembly is not required to enact a statute before tolling may occur. Allocates responsibility for bridges in a county between that county and a municipality based on the size and location of the bridge. Allows a local county road and bridge board to undertake low water crossing projects. Requires the department to ensure that information regarding funding sources for low water crossing projects is made available to county boards of commissioners and county highway departments. Provides that money in the local road and bridge matching grant (matching fund) must be allocated, transferred, and distributed for specified purposes. Specifies the timing of those allocations, transfers, and distributions. Imposes conditions on the allocations, transfers, and distributions made from the matching fund, including, in state fiscal years beginning after June 30, 2027, limitations on the ability of a local unit to apply for a grant in certain circumstances. Allows local units to use grants from the matching fund for low water crossing projects. Reduces the required local matching amounts and increases the population thresholds that apply to certain local units, if the department approves a grant from the matching fund. Restates a provision allocating 50% of the amount available in the matching fund to local units with a population of less than 50,000. Increases the speed limit on Interstate Highway 465. Requires all townships to annually adopt a capital improvement plan, which must include the balance of all unrestricted funds that exceed the township's budget for the following year. Provides that a township must transfer 30% of the amount of the balance of all unrestricted funds that exceed the township's budget for the following year to the township roads and infrastructure fund. Requires a township board to adopt a resolution if favor of providing money for the improvement and maintenance of roads and infrastructure within the township before a township transfers money for such projects. Provides, for purposes of the provisions regarding township capital improvement plans and township roads and infrastructure funds, that unrestricted funds are cash reserves that are not obligated, committed, encumbered, or restricted for specified purposes. Urges the legislative council to assign to the interim study committee on roads and transportation the study of appropriate road funding formulas. Makes conforming changes.

roads and transportationthe senatehomeland security and transportationappropriations

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Bill Overview

Analyzed Economic Effects

13 provisions identified: 4 benefits, 2 costs, 7 mixed.

Higher vehicle tax caps in Marion County

Beginning July 1, 2025, a consolidated-city county with an approved road management plan can adopt higher vehicle taxes. The fixed vehicle surtax ceiling rises from $50 to $150; the percentage option stays at 2%–20%, with a $7.50 minimum. The wheel tax can range from $5 to $240 by vehicle class or weight, raising its ceiling from $80. These higher limits require local ordinances adopting both taxes together; they do not automatically raise registration bills. The city-county council must budget both taxes' revenue for allowed transportation uses.

Interstate 465 maximum speed reaches 65

Beginning July 1, 2025, the maximum lawful speed on Interstate 465 is 65 miles per hour. A lower speed still applies where a special hazard requires it or another lower limit is established. Exceeding the applicable maximum remains a Class C infraction.

Private partners can support shared roads

Beginning July 1, 2025, Indiana government bodies can make public-private agreements for shared arterial road projects. Agreements can cover long-term development, design, building, rebuilding, upkeep, repairs, financing, and land acquisition costs. The law adds a project-delivery option without setting household charges or project funding amounts.

Road grants cover dangerous water crossings

Beginning July 1, 2025, counties and municipalities can seek road and bridge grants to reduce danger from low-water crossings. This adds safety projects alongside eligible road and bridge repair or capacity projects in local road management plans. The transportation department must favor eligible projects it expects to have the greatest economic importance in their region. Eligibility and preference do not guarantee an award.

Temporary tax credit for railroad investment

Beginning January 1, 2025, certified taxpayers get a credit worth 50% of eligible railroad spending. Eligible applicants include Class II and III short-line railroads operating in Indiana. Owners or lessees of sidings, industrial spurs, or industry tracks can qualify through a nearby short-line railroad or a county with no more than 300,000 people. Routine railroad credits are capped at $3,500 per mile of Indiana track owned or leased at year-end. Each completed new rail-customer project has a $500,000 credit ceiling. Annual statewide caps are $9.5 million for railroad spending and $5 million for new rail infrastructure, starting with fiscal years after June 30, 2025. Applicants must finish the project, get state certification, and claim the credit on an annual state tax return. Routine spending cannot also generate a federal tax credit or be funded by state or federal grants. Unused credits carry forward for five tax years, but cannot be refunded or carried back. Credits can be assigned once; pass-through owners share credits by income share without claiming the same spending twice. Qualifying government- or port-owned tax-exempt entities can participate, but must transfer credits within one year after the certified tax year's close. The credit chapter expires December 31, 2027.

Road rules reach more small towns

Beginning July 1, 2025, the affected road-law chapter covers municipalities with at least 5,000 people, down from 15,000. Municipalities with 5,000–14,999 people are newly subject to its requirements. This changes local government obligations without setting a household payment.

Local bridge duties and funding expand

Local governments can use cumulative bridge funds for small structures, culverts, and grade separations under their control, besides bridges and approaches. Beginning July 1, 2025, counties must build, rebuild, maintain, and inspect qualifying non-state bridges longer than 20 feet, including inside municipalities. These bridges must have been county-inspected before January 1, 2024, or added to the county inventory after December 31, 2024. Municipalities must build, rebuild, and maintain non-state bridges measuring 20 feet or less within their limits. New bridges that may become county responsibilities must be developed in consultation with the county.

Road ratings shape local spending rules

Beginning July 1, 2026, qualifying counties, cities, and towns can lower their required road-building and preservation share from 50% to 40%. This applies to Motor Vehicle Highway Account money and excludes consolidated cities and counties containing them. Local roads must use PASER ratings, average at least 6, and have no more than 15% rated 1 or 2 in the prior calendar year. Consolidated cities must spend at least 65% of their account money on highway construction, rebuilding, and preservation. Beginning July 1, 2025, the transportation department, working with Purdue, must certify statewide road-data raters and use certified teams to check data quality.

Judgment money supports Kentucky crossing tolls

Beginning July 1, 2025, specified infraction-judgment money must enter a dedicated fund for a qualifying Indiana–Kentucky crossing project. The project must be within a metropolitan planning area. Money can only operate, maintain, repair, replace, or improve that project's tolling system, including major work. This supports the tolling system but prevents using that money for other purposes.

Road grants set local funding shares

Beginning July 1, 2025, approved road grants require a 20% local match for counties below 55,000 people. Cities and towns below 10,000 people also pay 20%; counties, cities, and towns at or above their thresholds pay 50%. At least half of yearly grant money must go to counties below 50,000 people and municipalities in those counties. Starting with state fiscal years after June 30, 2027, recipients of the law's separate local distributions face a reduced grant application ceiling. Their application cannot exceed the program's maximum grant amount minus the distribution received.

Townships must plan and fund infrastructure

Beginning July 1, 2025, every township must establish a road and infrastructure fund and adopt an annual capital plan by September 30. Plans must be filed with the state and disclose unrestricted funds above the next year's budget and why they are retained. The specified cash-balance transfer contributes 30% of those excess unrestricted funds under the rainy-day-fund transfer procedure. Before a written transfer agreement with a city, town, or county, the township board must approve a supporting resolution. Transferred money can support only township-approved road and infrastructure projects within the township.

Interstate toll options retain approval limits

Beginning July 1, 2025, interstate toll lanes require a state transportation decision, the Governor's approval, and a federal waiver. First lanes must be at least 75 miles from an interstate highway or bridge already tolled on July 1, 2017. That spacing limit does not apply to waiver applications made after January 1, 2025. Covered public-private projects and toll-road operators need a state law to charge tolls on Interstate 69 or covered roads existing or under construction on July 1, 2011. A specified federal waiver removes that requirement for covered nontolled facilities, but not Interstate 69; prior temporary exemptions for other project types are removed.

State highways gain a tollway path

Beginning July 1, 2025, Indiana's transportation department can designate state highways as tollways with the Governor's approval, without a separate law. Before designation, it must submit a plan to meet current new-highway design standards within five years or less. The department can also transfer a highway into a toll-road project with the Governor's approval and Indiana Finance Authority acceptance. Transfer terms must state any payment and require a contract, lease, or public-private agreement; control passes after delivery of the approved transfer certificate. These powers do not themselves set or start tolls.

Sponsors & Cosponsors

Sponsor

  • Jim Pressel

    Republican • House

Cosponsors

  • Blake Doriot

    Republican • Senate

  • Craig Snow

    Republican • House

  • Dave Heine

    Republican • House

  • Doug Miller

    Republican • House

  • Fady Qaddoura

    Democratic • Senate

  • J.D. Ford

    Democratic • Senate

  • Michael Crider

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 207 • No: 163

House vote • 4/17/2025

House concurred with Senate amendments

Yes: 68 • No: 17

Senate vote • 4/15/2025

Third reading: passed

Yes: 38 • No: 10

Senate vote • 4/14/2025

Amendment #9 (Young M) failed

Yes: 2 • No: 47

Senate vote • 4/14/2025

Amendment #11 (Pol) failed

Yes: 12 • No: 35

Senate vote • 4/14/2025

Amendment #10 (Pol) failed

Yes: 15 • No: 33

House vote • 2/20/2025

Third reading: passed

Yes: 72 • No: 21

Actions Timeline

  1. Signed by the Governor

    5/1/2025House
  2. Public Law 173

    5/1/2025House
  3. Signed by the President of the Senate

    4/23/2025Senate
  4. Signed by the President Pro Tempore

    4/22/2025Senate
  5. Signed by the Speaker

    4/21/2025House
  6. Motion to concur filed

    4/17/2025House
  7. House concurred with Senate amendments; Roll Call 496: yeas 68, nays 17

    4/17/2025House
  8. Returned to the House with amendments

    4/16/2025Senate
  9. Third reading: passed; Roll Call 442: yeas 38, nays 10

    4/15/2025Senate
  10. Second reading: amended, ordered engrossed

    4/14/2025Senate
  11. Amendment #8 (Brown L) prevailed; voice vote

    4/14/2025Senate
  12. Amendment #2 (Freeman) prevailed; voice vote

    4/14/2025Senate
  13. Amendment #1 (Crider) prevailed; voice vote

    4/14/2025Senate
  14. Amendment #10 (Pol) failed; Roll Call 414: yeas 15, nays 33

    4/14/2025Senate
  15. Amendment #12 (Young M) failed; voice vote

    4/14/2025Senate
  16. Amendment #11 (Pol) failed; Roll Call 415: yeas 12, nays 35

    4/14/2025Senate
  17. Amendment #9 (Young M) failed; Roll Call 416: yeas 2, nays 47

    4/14/2025Senate
  18. Amendment #5 (Young M) prevailed; voice vote

    4/14/2025Senate
  19. Committee report: amend do pass, adopted

    4/10/2025Senate
  20. Committee report: amend do pass adopted; reassigned to Committee on Appropriations

    3/27/2025Senate
  21. Senator Ford J.D. added as cosponsor

    3/27/2025Senate
  22. Senator Qaddoura added as third sponsor

    3/25/2025Senate
  23. First reading: referred to Committee on Homeland Security and Transportation

    3/3/2025Senate
  24. Referred to the Senate

    2/21/2025House
  25. Third reading: passed; Roll Call 249: yeas 72, nays 21

    2/20/2025House

Bill Text

  • Engrossed House Bill (H)

  • Engrossed House Bill (S)

  • Enrolled House Bill (H)

  • House Bill (H)

  • House Bill (S)

  • Introduced House Bill (H)

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