Indiana has a 3.05% flat state income tax — one of the lowest state rates in the Midwest. However, most residents also pay local county taxes.
Indiana State Income Tax Rate
| Tax Type | Rate |
|---|---|
| State income tax | 3.05% (flat) |
| County income tax | 0.5% - 3.13% |
| Total combined rate | 3.55% - 6.18% |
Indiana uses a flat tax rate — everyone pays the same percentage regardless of income.
Indiana County Income Tax Rates
Highest County Rates
| County | County Rate | Total Rate (+ state) |
|---|---|---|
| Pulaski | 3.13% | 6.18% |
| Adams | 2.91% | 5.96% |
| Jay | 2.86% | 5.91% |
| Randolph | 2.77% | 5.82% |
| Fayette | 2.66% | 5.71% |
Major Metro Rates
| County | County Rate | Total Rate (+ state) |
|---|---|---|
| Marion (Indianapolis) | 2.02% | 5.07% |
| Lake (Gary) | 1.5% | 4.55% |
| Allen (Fort Wayne) | 1.35% | 4.40% |
| St. Joseph (South Bend) | 1.75% | 4.80% |
| Hamilton (Carmel) | 1.0% | 4.05% |
Lowest County Rates
| County | County Rate | Total Rate (+ state) |
|---|---|---|
| Ohio | 0.75% | 3.80% |
| Switzerland | 1.0% | 4.05% |
| Vermillion | 1.0% | 4.05% |
Indiana Tax Calculator Examples
Example 1: $75,000 in Marion County (Indianapolis)
| Component | Calculation |
|---|---|
| Gross income | $75,000 |
| State tax (3.05%) | $2,288 |
| County tax (2.02%) | $1,515 |
| Total IN tax | $3,803 |
| Effective rate | 5.07% |
Example 2: $100,000 in Hamilton County (Carmel)
| Component | Calculation |
|---|---|
| Gross income | $100,000 |
| State tax (3.05%) | $3,050 |
| County tax (1.0%) | $1,000 |
| Total IN tax | $4,050 |
| Effective rate | 4.05% |
Indiana Deductions & Exemptions
Standard Deductions (Exemptions)
Indiana doesn’t have a traditional standard deduction but offers exemptions:
| Exemption Type | Amount |
|---|---|
| Personal exemption (each) | $1,000 |
| Dependent exemption (each) | $1,500 |
| Age 65+ exemption | $1,000 |
| Blind exemption | $1,000 |
Renter’s Deduction
Indiana allows renters to deduct up to $3,000 of rent paid during the year.
What Income is Taxed in Indiana?
Taxed:
- Wages and salaries
- Self-employment income
- Interest and dividends
- Capital gains
- 401(k) and traditional IRA distributions (over exemption)
- Private pension income (over exemption)
- Rental income
Not taxed:
- Social Security — Fully exempt
- First $2,000 of retirement/pension income (if 62+)
- Military retirement pay (over exemption limits)
- Indiana municipal bond interest
Retirement Income Exemption
Taxpayers 62 or older get a deduction:
- Up to $2,000 of retirement income (pensions, 401k, IRA) is exempt
Indiana vs. Neighboring States
| State | Top Income Tax Rate | Notes |
|---|---|---|
| Indiana | ~3.05-6.18% | Flat + county |
| Ohio | 3.50% | Progressive |
| Kentucky | 4.0% | Flat |
| Illinois | 4.95% | Flat |
| Michigan | 4.25% | Flat |
Indiana’s state rate is among the lowest, but county taxes add significantly.
Filing Indiana State Taxes
| Filing Requirement | Details |
|---|---|
| Form | IT-40 |
| Due date | April 15 (with federal) |
| E-file | Yes, through IN DOR |
| Extension | 60 days automatic |
Indiana Sales Tax
- State rate: 7%
- No local sales tax
- Groceries exempt (food for home)
Indiana’s 7% sales tax is higher than average.
Tips to Reduce Indiana Taxes
- Choose low-tax county — Hamilton vs. Marion saves 1%+
- Max retirement contributions — 401(k), IRA reduce taxable income
- Claim renter’s deduction — Up to $3,000
- Age 62+ exemption — $2,000 retirement income exempt
- HSA contributions — Triple tax advantage
- Check county tax credits — Some counties offer credits
Indiana Tax Resources
Indiana Department of Revenue
- Website: in.gov/dor
- Phone: 317-232-2240
- County tax rates updated annually
Bottom Line
Indiana has a 3.05% flat state income tax — among the lowest in the region. However, county income taxes of 0.5% to 3.13% bring total rates to 3.55% to 6.18% depending on where you live. Social Security is fully exempt, and taxpayers 62+ get a $2,000 retirement income exemption. Choosing a low-tax county can save significant money annually.
For a side-by-side comparison of every state’s income tax rates, see state income tax rates by state 2026 and best and worst states for taxes 2026. Federal income tax applies on top of state taxes — see 2026 federal income tax brackets to calculate your combined liability.
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