Indiana is one of the most affordable states in the Midwest, with a cost of living about 10% below the national average, a flat 3.05% state income tax, and median home prices well under $250,000 in most cities. Indianapolis is the clear economic hub, with strong job markets in healthcare (Eli Lilly, IU Health), logistics (FedEx hub, crossroads of I-65/I-69/I-70), manufacturing, and a growing tech scene. Fort Wayne, South Bend, and Evansville offer even lower costs with solid local economies. The one caveat is county income taxes — Indiana adds a county-level surcharge of 0.5% to 2.84% on top of the flat state rate, so your effective rate depends on where you live.
Indiana at a Glance
| Metric | Value | National Rank |
|---|---|---|
| Population (2024) | 6.9 million | 17th |
| Median household income | $65,894 | 36th |
| Median home price | $240,000 | Well below average |
| Cost of living index | 89 | 10th lowest |
| State income tax | 3.05% flat (+ county tax) | Low |
| Sales tax | 7% | Average |
| Property tax (effective rate) | 0.81% | Below average |
Income and Housing
| City/Metro Area | Median Income | Median Home Price | Median Rent (2BR) | Affordability |
|---|---|---|---|---|
| Indianapolis | $62,400 | $260,000 | $1,150 | Excellent |
| Carmel/Fishers | $110,000 | $420,000 | $1,600 | Good |
| Fort Wayne | $56,200 | $210,000 | $950 | Excellent |
| Evansville | $54,400 | $185,000 | $850 | Excellent |
| South Bend | $48,800 | $175,000 | $900 | Good |
| Bloomington | $44,200 | $250,000 | $1,050 | Fair |
| Lafayette | $56,800 | $225,000 | $1,000 | Good |
| Terre Haute | $42,400 | $130,000 | $750 | Good |
Taxes
Indiana has a flat 3.05% state rate plus county income tax (0.5-2.84% depending on county — most are 1-2%).
| Gross Income | Federal | IN Income Tax (3.05% + 1.5% county) | FICA | Property ($240K) | Total Rate |
|---|---|---|---|---|---|
| $75,000 | $8,115 | $3,413 | $5,738 | $1,944 | 25.6% |
| $100,000 | $13,615 | $4,550 | $7,650 | $1,944 | 27.8% |
Indiana Pros and Cons
| Financial Pros | Financial Cons |
|---|---|
| Very affordable (89 index) | Below-average incomes (36th) |
| Low flat income tax (3.05%) | County income tax adds 1-2.8% |
| Affordable housing ($240K median) | Limited high-paying industries outside Indy |
| Indianapolis is an underrated major city | Cold winters, heating costs |
| Strong manufacturing sector | Brain drain to coastal cities |
| Moderate property taxes | Not as exciting for young professionals |
Related: Cost of Living by State | State Income Tax Rates | Property Tax by State