Key Tax Facts: Indiana
- Flat 3.0% rate for tax year 2025, falling to 2.95% in 2026 and 2.9% in 2027
- County income taxes range from 0.5% to 3.38% on top of state rate
- Social Security benefits are exempt
- Military pay earned outside Indiana is exempt
Estimate Your 2026 Federal and Indiana State Income Tax
Indiana State Income Tax Overview
Indiana has a flat state income tax rate of 3.0% for tax year 2025, down from 3.05% in 2024. H.B. 1001 accelerated previously enacted reductions and repealed the tax triggers, locking in 2.95% for 2026 and 2.9% for 2027 and beyond. On top of the state rate, every Indiana county levies its own local income tax, ranging from roughly 0.5% to over 3%, based on your county of residence as of January 1. Indiana has no standard deduction but offers a $1,000 personal exemption per filer and $1,000 per dependent, with an additional $1,500 for qualifying dependents. Social Security benefits and military retirement pay are exempt from Indiana income tax.
What Is Different About Indiana's Income Tax
Deductions and exemptions
Indiana has no standard deduction. It provides a $1,000 personal exemption per taxpayer and dependent, plus $1,500 for each dependent child, and allows a renter's deduction of up to $3,000, a deduction for property tax on a principal residence up to $2,500, and a deduction for unemployment compensation under an income limit.
Credits worth knowing
Credits include an earned income credit set at 10% of the federal credit, a credit for taxes paid to other states, a $100 per-child credit for adoption, and college contribution credits. All 92 counties also levy their own local income tax, ranging from under 1% to over 3%, which is collected on the state return and often exceeds the state tax itself.
Retirement, capital gains, and other income
Social Security and Railroad Retirement benefits are exempt, and military retirement pay is fully deducted. Pension, 401(k), and IRA income is taxed at the 3.0% flat rate, as are capital gains. Indiana's rate is scheduled to keep falling, reaching 2.9% for 2027.
Rules summarized from the Indiana Department of Revenue guidance for tax year 2026. Amounts that index annually are described in general terms; confirm the current figure on the official form instructions.
Indiana Income Tax Rate (2026) projected
Indiana uses a flat income tax rate -- the same percentage applies to all taxable income regardless of how much you earn.
Source: Indiana Department of Revenue
What a Indiana Resident Actually Pays: A Worked Example
| Taxable Income | $65,000.00 |
| Indiana Flat Rate | 3% |
| Estimated State Tax | $1950.00 |
| Effective Rate | 3% |
Where Indiana Stands Among the 50 States
Indiana's top rate of 3% ranks #38 of the 41 states that tax wages -- among the ten lowest of the states that levy the tax at all. The median top rate across those 41 states is 5.2%, so Indiana is below the middle of the pack. It is one of 14 states with a single flat rate, so every taxable dollar is taxed at 3% and the effective rate never climbs with income the way it does in the 27 graduated-rate states.
On sales tax the picture is similar: Indiana's combined state and average local rate of 7% ranks #24 of 50, against a national median of 7.00%.
Indiana State Tax at Five Income Levels (2026, single filer)
| Taxable income | Indiana tax | Effective rate | Marginal rate |
|---|---|---|---|
| $40,000 | $1,200 | 3.00% | 3% |
| $65,000 | $1,950 | 3.00% | 3% |
| $100,000 | $3,000 | 3.00% | 3% |
| $150,000 | $4,500 | 3.00% | 3% |
| $250,000 | $7,500 | 3.00% | 3% |
Brackets applied directly to the taxable-income figure shown, before Indiana-specific deductions, exemptions, or credits. Federal tax is separate and comes on top of every row.
Indiana vs. Its Neighbors on $75,000 of Taxable Income
A Indiana resident with $75,000 of taxable income pays about $2,250 in state income tax. Of Indiana's 4 neighboring states, 1 would tax that income less and 3 would tax it more.
Frequently Asked Questions -- Indiana Income Tax
Does Indiana have a state income tax?
Yes. Indiana imposes a state income tax with a flat rate of 3%. This is separate from your federal income tax obligation.
What is the Indiana income tax rate for 2026?
Indiana uses a flat income tax rate of 3% on all taxable income, regardless of income level or filing status.
Do I have to file a Indiana state tax return?
Most full-year Indiana residents with income above the state filing threshold must file a state return. Check the Indiana Department of Revenue for current thresholds and requirements.
How accurate is this estimate?
The federal figure uses the official IRS 2026 brackets and standard deduction. The Indiana figure applies the 2026 single-filer rate schedule to the same taxable income; it does not model Indiana-specific deductions, exemptions, credits, or local income taxes, so treat it as a planning number and confirm with the Indiana Department of Revenue or a tax professional before filing.
How does Indiana compare with nearby states?
On $75,000 of taxable income, Indiana collects about $2,250. Ohio collects $1,346, Kentucky collects $3,000, Michigan collects $3,188, Illinois collects $3,713. See the comparison table above.
Where does Indiana rank on state income tax?
Indiana's top rate of 3% ranks #38 of the 41 states with an income tax, against a median top rate of 5.2%. Its combined sales tax of 7% ranks #24 of 50.
Does this calculator include federal income tax?
Yes. It estimates your 2026 federal income tax using the official IRS 2026 brackets, then applies the Indiana rate schedule to the same taxable income and shows both figures plus the combined total.
Where can I find official Indiana tax forms?
Official forms, instructions, and filing guidance are available at the Indiana Department of Revenue.
What is the sales tax rate in Indiana?
Indiana's combined state and average local sales tax rate is 7%. This is separate from income tax and applies to most retail purchases -- use our sales tax calculator to check a specific purchase.
When are Indiana 2026 state taxes due?
2026 taxes are generally filed in 2027. The Indiana filing deadline is April 15, 2027, the same as the federal deadline.
Understanding Your Indiana Tax Estimate
Your results combine two separate bills: federal tax owed to the IRS, and Indiana state tax owed to the Indiana Department of Revenue. The state return is filed separately from your federal Form 1040, with a state filing deadline of April 15. For the mechanics of how bracket math actually works -- why your effective rate is almost always lower than your top bracket -- see our marginal vs. effective tax rate guide.
Lowering Your Indiana Bill
Pre-tax retirement contributions reduce your federal and Indiana taxable income in the same move -- see our 401(k) contribution limits and HSA limits guides for the current caps. Beyond that, Indiana-specific credits and deductions that don't exist at the federal level are listed at the Indiana Department of Revenue -- worth checking, since these are easy to miss if you only look at federal guidance.
Combined Sales + Income Tax Picture
Indiana's combined state-plus-average-local sales tax rate is 7%. If you're self-employed, that's an added layer on top of income tax -- our self-employment tax calculator covers the SE-specific piece separately.
Disclaimer: Estimates for educational purposes only. State tax results are approximations based on published bracket data and do not account for all deductions, credits, exemptions, local taxes, or individual situations. Not tax, legal, or financial advice. Consult the Indiana Department of Revenue or a qualified tax professional for guidance specific to your situation.