Does Indiana have a state income tax?

Yes. Indiana has a state income tax with a top rate of 2.9%.

How much is Indiana state tax on a $100,000 salary?

On a $100,000 salary in Indiana, state income tax is approximately $2,475. Your estimated total take-home pay is $76,705/year.

What other taxes does Indiana have?

Indiana has a 7% state sales tax — one of the higher rates in the Midwest. County income taxes vary from 0.5% to 2.9% depending on your county of residence. Indiana has no estate or inheritance tax. Property taxes are capped by state law at 1–3.3% of assessed value depending on property type.

How does Indiana compare to other states for taxes?

Indiana's top rate of 2.9% compares favorably — below the national median for state income taxes.

What is Indiana's income tax rate?

Indiana has a flat 2.95% state income tax rate in 2026 (down from 3.15% in 2023, per HEA 1001's multi-year phase-down toward 2.9%). Among the lowest flat rates in the country. Most Indiana residents also pay a county income tax ranging from 0.5% to 2.9%, so your actual combined rate is typically 4–5%.

Does Indiana have a local income tax?

Yes — Indiana counties levy their own income tax in addition to the state rate. These range from 0.5% in some rural counties to 2.9% in Pulaski County. Marion County (Indianapolis) charges 2.02%. The county tax is withheld along with state income tax.

How do Indiana taxes compare to Ohio?

Indiana's flat 2.95% state rate is significantly lower than Ohio's graduated rates. However, both states have local income taxes on top of state rates. Ohio's 0% bracket for income under $26,050 helps lower earners, while Indiana's flat rate benefits higher earners more.

State Tax Guide

Indiana State Income Tax Guide (2026)

Indiana has a flat 2.95% state income tax rate (2026 step in HEA 1001's multi-year phase-down) — among the lowest flat rates in the country — plus local county income taxes averaging around 1.6%.

Top State Rate

2.9%

$100k Take-Home

$76,705

/year (single)

State Tax on $100k

$2,475

single filer

Indiana Income Tax Brackets (2026)

Marginal Rate	Taxable Income (Single Filer)
2.95%	$0→All income (2026)

Each rate applies only to income within that bracket. Your effective rate is the average across all brackets — meaningfully lower than your top marginal rate.

Brackets reflect the most recently published schedules. Some states inflation-index thresholds annually — specific 2026 amounts may shift slightly. Verify with your state's Department of Revenue before filing.

$100,000 Salary in Indiana — Full Tax Breakdown

Category	Annual	Monthly
Gross Salary	$100,000	$8,333
Federal Tax	−$13,170	−$1,098
FICA (SS + Medicare)	−$0.00	−$0.00
Indiana State Tax	−$2,475	−$206
Take-Home Pay	$76,705	$6,392

Assumes single filing status, standard deduction, no 401(k) or HSA contributions. 2026 tax year.

Run your numbers through the right calculator

Salaried, freelance, bonus, overtime, or tips — pick the tool that matches your event.

Salary Calculator

Annual gross to take-home: federal + state + FICA + 401(k)/HSA modeling for all 50 states.

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Overtime Calculator

Apply the 2025 OBBBA 'No Tax on Overtime' deduction (up to $12,500) and see real savings.

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1099 Tax Calculator

1099, sole prop, or LLC: self-employment tax (15.3%) plus quarterly estimates.

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Bonus Calculator

Year-end, sign-on, retention, or commission. Compare flat 22% vs aggregate withholding.

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The 30-second version

1.Indiana has a flat state income tax (2.95% for 2026, dropping from 3.15% in 2023 under HEA 1001's multi-year phase-down). On track to reach 2.9% by 2027 if revenue triggers are met.
2.Mandatory county income tax adds 0.5%–2.9% on top of state rate. Marion County (Indianapolis) 2.02%, Allen County (Fort Wayne) 1.59%, Hamilton County (Carmel/Fishers) 1.10%, St. Joseph (South Bend) 1.75%. Combined state + county effective rate: 3.5–5.5% for most residents.
3.No state standard deduction — IN uses a personal exemption ($1,000 per filer + $1,500 per dependent). Renters Deduction worth $3,000 per year for primary residence renters.
4.Property tax capped by state law at 1% of assessed value for primary residences, 2% for rental property, 3% for everything else (Indiana Constitution Article 10, Section 1). Among the friendliest property tax structures in the Midwest.
5.Reciprocity with KY, MI, OH, PA, WI for wage income — IN residents working in those states owe only IN tax (or vice versa).

Why you can trust these numbers

Numbers reflect 2026 IRS federal brackets, FICA caps, and the current Indiana Department of Revenue 2.95% state rate. The calculator at the top reflects this directly. County income tax (typically 1–2.5%) is NOT modeled by the calculator — add it manually for combined state + county picture.

Sources: federal brackets + standard deduction from IRS Rev. Proc. 2025-32; state brackets verified against the Tax Foundation 2026 State Income Tax Rates compilation and the official IT-40 Individual Income Tax Forms (IN Department of Revenue).

The flat state + mandatory county tax — Indiana's two-tier system

Indiana's flat state income tax rate has been on a multi-year phase-down: 3.23% (2022), 3.15% (2023), 3.05% (2024), 3.00% (2025), 2.95% (2026), targeting 2.9% by 2027 if revenue triggers are met. The flat rate applies to all income above the personal exemption ($1,000/filer + $1,500/dependent).

Every Indiana resident also owes a county income tax — set by the county of residence as of January 1 each year. Rates vary widely: 0.5% (rural Newton County) to 2.9% (Pulaski County). Major county rates: Marion (Indianapolis) 2.02%, Allen (Fort Wayne) 1.59%, Hamilton (Carmel/Fishers/Noblesville) 1.10%, Lake (Gary) 1.50%, Vanderburgh (Evansville) 1.20%, St. Joseph (South Bend) 1.75%, Tippecanoe (Lafayette/West Lafayette) 1.28%. The county tax is collected with the state return and goes directly to the resident's county. There's no opt-out — every Hoosier pays both.

What you'll actually pay — two real-life scenarios

Two scenarios to anchor the math.

Illustrative — single filer unless noted, federal standard deduction, full-year IN residency, W-2 income unless specified. County income tax shown separately because the calculator doesn't model it. Two-earner MFJ households pay more FICA than the calculator shows. Ballparks, not invoices.

Scenario 1: Indianapolis software engineer, $110,000

Federal income tax	~$15,800
Indiana state income tax (2.95% × $95K taxable)	~$2,800
Marion County income tax (2.02% × $110K)	~$2,220
FICA (Social Security + Medicare)	~$8,400
Total taxes	~$29,220
Annual take-home	~$80,780
Effective state + county rate	~4.6%

Indianapolis tech worker — Salesforce, Eli Lilly tech division, Cummins, Anthem. Same comp in Chicago: ~$5,500 IL state tax + property tax meaningfully higher. IN's $5K combined state + county is competitive. The Hamilton County suburbs (Carmel, Fishers) have a much lower county rate (1.10%) — choosing residence outside Marion County saves ~$1,000/year in this scenario.

Scenario 2: Fort Wayne family, $150,000 combined (MFJ)

Federal income tax	~$16,250
Indiana state income tax (2.95% × $120K taxable)	~$3,550
Allen County income tax (1.59% × $150K)	~$2,400
FICA (two earners)	~$11,500
Total taxes	~$33,700
Annual take-home	~$116,300
Effective state + county rate	~4.0%

Fort Wayne professional family — Lutheran Health, Sweetwater Sound, Steel Dynamics, regional banks. The $6K combined IN state + county is dramatically cheaper than peer Midwest states (IL ~$8,500, MN ~$8,500). Combined with Fort Wayne's exceptionally low cost of living (median home $230K), the after-tax-after-housing math is among the best in the country at this income level.

Property tax — caps protect homeowners

Indiana's Property Tax Caps (constitutional, Article 10 Section 1) limit annual property tax to a percentage of gross assessed value: 1% for owner-occupied primary residences, 2% for rental property and farmland, 3% for all other property (commercial, industrial, second homes). This is among the most homeowner-friendly property tax structures in the Midwest.

Effective rates by county (approximate, primary residence): Marion (Indianapolis) ~0.85%, Hamilton (Carmel/Fishers) ~0.85–0.95%, Allen (Fort Wayne) ~0.78–0.92%, Lake (Gary) ~0.93%, Tippecanoe ~0.85%, Vanderburgh ~0.69%. Statewide average ~0.85%. Always at or below the 1% cap for primary residences thanks to the constitutional structure.

Things financially comfortable Hoosiers actually do

Max your 401(k) ($24,500 in 2026) — pre-tax for federal AND Indiana (state + county).
Max your HSA if eligible — pre-tax for federal AND IN.
Backdoor Roth IRA — fully legal.
Mega backdoor Roth if your employer's 401(k) plan allows.
Renters Deduction — $3,000/year deduction if you rent your primary IN residence. Often missed in self-prepared returns.
CollegeChoice 529 (Indiana's plan) — IN offers a 20% state-tax CREDIT (not deduction) up to $1,500 per beneficiary annually for contributions to Indiana 529 plans. This is among the most generous 529 incentives in the country — saves $1,500/year per kid for typical contributors. Worth maxing.
Reciprocity — IN has reciprocal tax agreements with KY, MI, OH, PA, WI. IN residents working in those states file the appropriate non-residence certificate with their cross-state employer.
Choose your county wisely — county income tax differential matters. A Hamilton County resident (1.10%) earning $150K saves $1,400/year vs Marion County (2.02%). Often a meaningful factor in residential housing decisions for Indianapolis-area professionals.

Real questions people actually ask

Q: Will Indiana keep cutting its income tax rate?

On schedule, yes. HEA 1001 (2022) set the multi-year phase-down: 3.15% (2023) → 3.05% (2024) → 3.00% (2025) → 2.95% (2026) → 2.90% (2027). Each step is contingent on revenue growth meeting specified triggers. In normal economic conditions, the schedule should hold. A recession could pause specific years.

Q: Does Indiana tax retirement income?

Mostly yes. SS exempt. Pension income exclusion: limited (Indiana doesn't have a general retirement income exclusion like IL or PA). Military retirement: exempt up to $6,250 (modest). Federal civil service / state employee retirement: covered by the same modest exclusions. Net effect: IN is moderate for retirees — better than NY or NJ, but not as friendly as IL (full exemption) or PA (full exemption).

Q: I work in Chicago but live in NW Indiana. How does that work?

Under the IL-IN reciprocity agreement, IN residents working in IL owe only IN tax. File IL Form W-5-NR with your IL employer. You file an IN resident return that taxes your IL wages at IN's combined state + county rate. The savings vs being a full IL resident are meaningful — IL state alone is 4.95%; IN combined state + Lake County county is ~4.45%, plus much cheaper IN property tax. This is a real driver of NW Indiana's growth as a bedroom community for Chicago commuters.

Q: How does the CollegeChoice 529 credit work?

Unlike most state 529 incentives (deductions), Indiana offers a 20% tax CREDIT on contributions to Indiana CollegeChoice 529 plans, capped at $1,500/year per beneficiary. So contribute $7,500 → get $1,500 IN tax credit (refundable up to your IN tax liability). For a typical IN family with $5K of state + county liability, the credit can entirely zero out the IN state tax line. Best 529 incentive in the country dollar-for-dollar.

Our honest opinion (which is just an opinion)

Indiana is a quietly excellent tax state for working professionals. The combination of a low and falling flat state rate, constitutional property tax caps, generous CollegeChoice 529 credit, and reciprocity with 5 neighbors makes IN highly competitive in the Midwest. The mandatory county tax is the wrinkle that some new residents don't see coming.

The case for Indiana:

Flat state rate phasing toward 2.9% by 2027
Constitutional 1% property tax cap on primary residences
CollegeChoice 529 credit is among the best in the country
Reciprocity with KY, MI, OH, PA, WI for wage income
Cost of living significantly cheaper than IL or peer states
Diverse economy: tech, manufacturing, agriculture, healthcare, logistics
No state estate or inheritance tax

The case against:

Mandatory county income tax (0.5–2.9%) compounds the state rate
No general state retirement income exclusion (less retirement-friendly than IL or PA)
Sales tax 7% — among the higher in the Midwest
Public school funding varies enormously by district

Honest take: if you're a working professional, IN is one of the most competitive Midwest states tax-wise — especially in lower-county-tax counties (Hamilton, Hancock). For Chicago-area professionals: NW Indiana commuter living offers real tax + cost-of-living savings via IL-IN reciprocity. For retirees: IN is moderate; IL or PA may be more retirement-friendly depending on income mix.

What now

Run your numbers in the calculator above. Add your county income tax (typically 1–2.5%) — the calculator only models the state rate. If you have kids, MAX the CollegeChoice 529 contribution to capture the 20% credit. If you rent, claim the $3,000 Renters Deduction. The biggest tax mistake most Hoosiers make isn't paying too much state tax — it's missing the CollegeChoice 529 credit (which can entirely zero out their IN tax bill) or forgetting the Renters Deduction.

Sources & further reading

A few honest notes

Not personal tax, legal, or financial advice. Verify with a licensed CPA, EA, or tax attorney before making meaningful decisions.
Tax law changes. This guide reflects 2026 IRS schedules and current IN Department of Revenue rules. The flat-tax phase-down is contingent on annual revenue triggers.
County income tax rates are set annually by each county — verify your specific county's current rate.
The numbers are illustrative — scenarios don't include every credit, deduction, or wrinkle that might apply to you.
The calculator at the top doesn't model county income tax — add it manually for accurate combined picture.
No client relationship is created by reading this page.

Last updated April 2026 with 2026 IRS schedules and current IN Department of Revenue guidance.