Indiana State Income Tax Guide (2026)
Indiana has a flat 2.95% state income tax for 2026 — the current step in HEA 1001's phase-down toward 2.9%. Every Hoosier also owes a mandatory county income tax (0.5% to 3%) — Marion 2.02%, Hamilton 1.10%, Allen 1.59% — which compounds the state rate. Combined effective for most professionals: 3.5-5.5%.
Top State Rate
2.95%
$100k Take-Home
$76,260
/year (single)
State Tax on $100k
$2,921
single filer
Indiana Income Tax Brackets (2026)
| Marginal Rate | Taxable Income (All filing statuses) |
|---|---|
| 2.95% | $0→All income (2026) |
Each rate applies only to income within that bracket. Your effective rate is the average across all brackets — noticeably 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.
Want exact numbers for your situation?
The dedicated Indiana paycheck calculator lets you adjust salary, filing status (single, MFJ, HOH, MFS), 401(k) and HSA contributions, dependents, and city/county tax for your exact 2026 take-home figure.
The 30-second version
- 1.Indiana's headline 2.95% flat state rate (2026) is among the lowest in the country, on a documented phase-down toward 2.9% by 2027 under HEA 1001's revenue-trigger schedule. Cuts have hit every year since 2022: 3.23% → 3.15% → 3.05% → 3.00% → 2.95%.
- 2.Every Hoosier owes a mandatory county income tax on top — there's no opt-out, no rural escape. Marion (Indianapolis) 2.02%, Hamilton (Carmel/Fishers) 1.10%, Allen (Fort Wayne) 1.59%, St. Joseph (South Bend) 1.75%, Lake (Gary/NW IN) 1.50%, Tippecanoe 1.28%, Randolph 3.00% (highest), Porter 0.50% (lowest). Combined state + county effective for most professionals: 3.5-5.5%.
- 3.CollegeChoice 529 offers a 20% tax CREDIT (not deduction) on contributions, capped at $1,500 per return ($750 married filing separately) however many children you save for (DOR Information Bulletin #98). Contribute $7,500 a year to capture the full credit. For a typical IN family it offsets a large share of the state income tax line (not the county tax). Best 529 incentive in the country dollar-for-dollar.
- 4.Property tax is capped by the Indiana Constitution (Article 10, Section 1): 1% of assessed value for primary residences, 2% for rental property and farmland, 3% for everything else. Statewide effective average ~0.85%. Among the most homeowner-friendly structures in the country.
- 5.Reciprocity with KY, MI, OH, PA, WI on wage income — not Illinois. NW Indiana (Lake/Porter counties) is a $300K-bedroom-community alternative to Chicago for its housing and property tax, but a Chicago job still pays Illinois's 4.95% plus the county tax.
A quick hello before we start
Whether you're reading this from a Lucas Oil parking lot or somewhere off I-65 between Indianapolis and Lafayette — this is the last IN-tax page you should need this year. Nothing here is personal tax, legal, or financial advice. Your situation has wrinkles only your CPA can iron out — treat this like a thoughtful friend over an Upland Wheat, not your accountant.
Last reviewed: October 2026 · Reviewed annually each January when new brackets publish
Why you can trust these numbers
Numbers reflect 2026 IRS federal brackets per Rev. Proc. 2025-32, caps per the SSA October 2025 notice, and the current Indiana Department of Revenue 2.95% state flat rate (HEA 1001 schedule). IN does not provide a state standard deduction — the IT-40 starts from federal and the structure uses a $1,000 personal exemption per filer ($2,000 on a joint return, per Schedule 3 line 1) plus $1,000 per dependent and an additional $1,500 per qualifying dependent child. The calculator at the top applies the filer exemptions; it does not yet apply the dependent ones, so with children it slightly overstates Indiana tax. Until August 2026 it had been subtracting the federal standard deduction instead, which understated Indiana tax by about $445 a year for a single filer and $891 for a joint one — the figures on this page were computed on the correct basis throughout, so it was the calculator that disagreed with the page, not the other way round. County tax is not modelled by the calculator; note that it rides the same exemption-reduced base (Schedule CT-40 line 1 is IT-40 line 7), not gross pay.
County income tax rates are NOT modeled by the calculator. They are set annually by each of Indiana's 92 counties — verify your specific county's current rate at filing time. Numbers here reflect Indiana DOR's published 2026 county rate schedule. Add your county rate manually to the calculator output for the combined picture. Reviewed annually each January.
Sources: federal brackets + standard deduction from IRS Rev. Proc. 2025-32; state brackets verified against the official Individual income tax rates and filing information (IN Department of Revenue), and the enacting legislation IN HB 1002 (2022) — phased rate cuts toward 2.9% by 2027.
Flat 2.95% — and the mandatory county tax everyone forgets to mention
Indiana's flat state rate has been on a steady phase-down: 3.23% (2022) → 3.15% (2023) → 3.05% (2024) → 3.00% (2025) → 2.95% (2026), targeting 2.9% by 2027 if the revenue trigger continues to hold. HEA 1001 (2022) wrote the framework — each 0.05 percentage-point cut requires that General Fund revenue growth and the budget reserve clear specified thresholds. The schedule has hit every year so far. Normal economic conditions should carry it through 2.9% in 2027. A recession could pause specific steps.
The state rate is half the picture. Every Indiana resident also owes a county income tax — set by the county of residence as of January 1 each year, applied to the same taxable income base, collected with the state return, and remitted to the resident's home county. There's no opt-out. Rates vary dramatically: 0.5% in Porter County to 3% in Randolph (DOR Departmental Notice #1, 2026). Major county rates: Marion (Indianapolis) 2.02%, Hamilton (Carmel/Fishers/Noblesville) 1.10%, Allen (Fort Wayne) 1.59%, Lake (Gary/Hammond) 1.50%, St. Joseph (South Bend/Notre Dame) 1.75%, Vanderburgh (Evansville) 1.25%, Tippecanoe (Lafayette/West Lafayette) 1.28%, Vigo (Terre Haute) 2.00%, Monroe (Bloomington) 2.14%.
The state + county rates stack additively. An Indianapolis software engineer at $100K pays 2.95% state ($2,925) + 2.02% Marion County ($2,020) = ~$4,945 combined. The same person living 15 miles north in Carmel pays 2.95% state + 1.10% Hamilton County = ~$4,050. That $900/year difference compounds over a career — the structural reason Hamilton County is the fastest-growing Indianapolis-area county and has been for 20 years. The county tax is the variable that actually shapes Indiana residential decisions, not the state rate.
Reciprocity — and why it does not reach Illinois
Indiana has reciprocity with five states — KY, MI, OH, PA, WI — for wage income (DOR Information Bulletin #28). Illinois is not one of them: there is no IL-IN agreement, whatever the folklore says. NW Indiana (Lake and Porter counties — Hammond, Gary, Merrillville, Schererville, Valparaiso) sits within commuting distance of downtown Chicago via the South Shore Line or I-90/I-94, and many Hoosiers make that commute — but their taxes run through a credit, not reciprocity.
An IN resident working in IL owes Illinois tax on those wages as a nonresident (4.95%, on an IL-1040 with Schedule NR) and claims Indiana's credit for it — but that credit only offsets Indiana STATE tax, capped at Indiana's 2.95% rate. The county tax gets no credit for another state's tax, so it is due in full. Net for a Lake County resident: roughly 4.95% + 1.50% = 6.45% on Chicago wages, against 4.95% for an Illinois resident — about $2,235/year MORE on a $150K Chicago-area income. Where NW Indiana wins is property tax: ~0.85% effective vs Cook County 2.10-2.50%, or $5,000-$6,600/year on a $400K home, which leaves a homeowner roughly $2,800-$4,400/year ahead overall. (IL-W-5-NR does not apply — it covers residents of Iowa, Kentucky, Michigan and Wisconsin only.)
The trade-off is the commute. The South Shore Line is a real-but-not-luxurious commuter rail; rush-hour driving on I-90 is its own punishment. But the housing math has held for two decades, and Lake / Porter county housing remains 30-50% cheaper per square foot than the Cook County equivalent. Kentucky, unlike Illinois, IS a reciprocal state, so the Floyd / Clark county (Southern Indiana) commute to Louisville is the one that runs on reciprocity — see the KY guide for that half.
What you'll actually pay — four real-life scenarios
Four scenarios that cover most readers. Find the one closest to you. If none match, the calculator at the top is for you.
Illustrative numbers — single filer unless noted, federal standard deduction, full-year IN residency, W-2 income unless specified. IN does not have a state standard deduction; numbers assume the personal exemptions ($1,000 per filer and per dependent, plus $1,500 per qualifying child) have been applied. County income tax shown separately because the calculator doesn't model it. Two-earner MFJ households pay more FICA than the calculator shows because each spouse has their own Social Security cap. Ballparks, not invoices.
Scenario 1: Bloomington university professional, $68,000
| Federal income tax | ~$6,130 |
| Indiana state income tax (2.95% × $67,000 after the $1,000 exemption) | ~$1,977 |
| Monroe County income tax (2.14%, same exemption-reduced base) | ~$1,434 |
| FICA (Social Security + Medicare) | ~$5,202 |
| Total taxes | ~$14,743 |
| Annual take-home | ~$53,257 |
| Effective state + county rate | ~5.0% |
IU faculty/staff, Cook Medical, or one of the Bloomington spinout biotech firms. Monroe County's 2.14% is on the high side for Indiana, but Bloomington's cost of living is among the lowest of any major US college town (median home ~$280K). The CollegeChoice 529 credit alone (maxed at $7,500 of contributions a year) returns $1,500 — the cap is per return, not per child — which covers most of the ~$1,977 IN state tax line here. The structural cheap-college-town math is why a lot of academic households pick IN over peer Big Ten states.
Scenario 2: Indianapolis software engineer, $110,000
| Federal income tax | ~$15,370 |
| Indiana state income tax (2.95% × $109K after the $1,000 exemption) | ~$3,216 |
| Marion County income tax (2.02%, same exemption-reduced base) | ~$2,202 |
| FICA (Social Security + Medicare) | ~$8,415 |
| Total taxes | ~$29,203 |
| Annual take-home | ~$80,797 |
| Effective state + county rate | ~4.9% |
Salesforce (formerly ExactTarget), Eli Lilly tech division, Cummins, Elevance Health (formerly Anthem), or one of the Indianapolis tech-adjacent startups. The same comp in Chicago: ~$5,300 IL state alone, plus dramatically higher property tax. Indianapolis's $5,440 combined is competitive — and choosing residence in Hamilton County instead of Marion (1.10% vs 2.02% county tax) saves ~$1,000/year for an extra 15-minute commute. That's the math driving Carmel and Fishers's explosive 20-year growth.
Scenario 3: NW Indiana Chicago commuter household, $200,000 (MFJ, both working in Chicago — no IL-IN reciprocity)
| Federal income tax | ~$26,340 |
| Indiana state income tax (2.95% × $198K, after the $2,000 MFJ exemption) | ~$5,841 |
| Credit for the Illinois tax on the same wages (capped at Indiana's rate) | −$5,841 |
| Lake County income tax (1.50%, same base — no credit for another state's tax) | ~$2,970 |
| Illinois state income tax (4.95% after $5,850 of exemptions, nonresident) | ~$9,610 |
| FICA (two earners, each with their own Social Security cap) | ~$15,300 |
| Total taxes | ~$54,220 |
| Annual take-home | ~$145,780 |
| Effective state + local rate | ~6.3% |
Classic Crown Point / Schererville / Valparaiso family — both spouses commuting to downtown Chicago via the South Shore Line or I-90. There is no IL-IN reciprocity: Illinois taxes the Chicago wages (~$9,610, the same as a Cook County family pays), Indiana's credit wipes out the Indiana state tax, and Lake County's 1.50% (~$2,970) comes on top — about $2,970/year MORE income tax than living in Cook County. The case for NW Indiana is the ~$8,000-$12,000/year lower property tax on a comparable home, which still leaves the family ~$5,000-$9,000/year ahead.
Scenario 4: Carmel finance / corporate household, $275,000 (MFJ)
| Federal income tax | ~$43,468 |
| Indiana state income tax (2.95% × $273K, after the $2,000 MFJ exemption) | ~$8,054 |
| Hamilton County income tax (1.10%, same exemption-reduced base) | ~$3,003 |
| FICA (two earners + Additional Medicare) | ~$21,263 |
| Total taxes | ~$75,788 |
| Annual take-home | ~$199,212 |
| Effective state + county rate | ~4.0% |
Carmel / Fishers / Zionsville / Noblesville household — one spouse at Eli Lilly senior engineer/scientist, the other at Anthem corporate, Cummins, or one of the Indianapolis-area RIAs. Hamilton County's 1.10% is the structural reason the entire 465-loop's northern arc has been the fastest-growing part of Indiana for two decades. Same comp in Chicago: ~$13,323 IL state + far higher property tax + Cook County's 2.10-2.50% effective vs Hamilton's ~0.85% — total IN savings $15,000-$20,000/year before housing arbitrage. Maxing CollegeChoice 529 returns another $1,500/year of IN state tax credit (the cap is per return, not per child).
Got the number you came for? Open the calculator at the top to run your specific salary — then add your county rate manually. Or keep reading — the property tax section and the CollegeChoice 529 section are the parts most IN articles undersell, and they're where the real Indiana tax advantage lives.
Open Indiana calculator →Property tax — the constitutional caps that actually work
Indiana's Property Tax Caps are constitutional (Article 10, Section 1, ratified by voters in 2010): annual property tax cannot exceed 1% of gross assessed value for owner-occupied primary residences, 2% for rental property and farmland, 3% for all other property (commercial, industrial, second homes). Effective rates always at or below those caps. Statewide average ~0.85% on primary residences — among the most homeowner-friendly structures in the country.
Approximate effective rates by county on a primary residence: Marion (Indianapolis) 0.85-0.95%, Hamilton (Carmel/Fishers) 0.85-0.95%, Allen (Fort Wayne) 0.78-0.92%, Lake (Gary/NW IN) 0.93-1.00% (closer to the 1% cap because of Gary's distressed grand list), Tippecanoe (Lafayette) 0.85%, Vanderburgh (Evansville) 0.69%, Monroe (Bloomington) 0.85%, St. Joseph (South Bend) 0.80-0.95%, Vigo (Terre Haute) 0.90-1.00%.
The Constitution-as-property-tax-cap structure is the part most movers from CT, NJ, NY, or IL don't fully appreciate until their first IN property tax bill arrives. A $400K Indianapolis-area home pays ~$3,400/year in property tax. The same house in Cook County Chicago pays $8,400-$10,000. The same house in Westchester or Long Island pays $9,000-$12,000. Over a 30-year mortgage the differential is $150,000-$250,000 of after-tax cash flow. That structural advantage is the underrated half of the IN tax pitch.
The 'should I leave for Florida / Tennessee?' math — actually run
The Sun Belt relocation pitch lands at every Indianapolis IT happy hour. Sometimes it's right. Often it isn't — IN is harder to beat on combined tax math than the social-media version suggests. Three variables most pitch decks understate:
- Income tax savings are smaller than you'd think: a $110K Indianapolis single pays ~$5,440 combined state + county. A $200K pays ~$9,840 in Marion County (~$8,020 in Hamilton). TN or FL charge $0 — but the savings is $5K-$10K/year, not the $15K+ that the same income would save by leaving NY or CA. The IN base rate is already low.
- Property tax delta favors IN, not Florida: Indiana statewide ~0.85% on primary residence (constitutional cap). Florida statewide ~0.83%. Same. Tennessee statewide ~0.71% — slightly lower. The property tax dividend from leaving IN is minor or negative. Compare against Hamilton or Tippecanoe County (~0.85%) — Florida only beats those marginally and Tennessee by half a point. The dividend doesn't compound the way it does from a NJ or CT departure.
- Cost of living delta: Indianapolis median home ~$280K. Fort Wayne ~$230K. Nashville ~$650K. Tampa ~$420K. Austin ~$510K. Leaving IN often costs more in housing arbitrage than it saves in state income tax — Nashville's mortgage premium alone exceeds 10 years of IN state tax for most movers.
- Lifestyle assets that don't move: Indianapolis 500. Notre Dame football. IU and Purdue basketball. The Indianapolis Children's Museum (genuinely the best in the country). Lake Michigan beach access for NW Indiana. Friends, family, in-state college tuition for kids. These aren't 'soft' considerations — they're often the actual reason you're in IN.
Honest take: under $200K of household income, leaving IN for FL or TN rarely pencils once you count housing arbitrage. $200K-$500K with portable income, the math is mixed and depends heavily on which Indiana county you're in (Marion savings are real; Hamilton savings are minimal because the combined rate is already low). Above $500K with portable income and no strong IN ties: FL or TN starts to make sense, especially in a one-time liquidity year. The 'just move to Florida' answer is right less often for Hoosiers than for residents of the high-tax states.
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Things financially comfortable Hoosiers actually do
If you're earning $100K+ in IN and you're not doing most of these, you may be leaving real money on the table. None of this is exotic. Most of it is 30 minutes of setup once a year and discipline the rest of the year.
- CollegeChoice 529 — the single best IN tax move if you have kids. 20% state-tax CREDIT (not deduction) on contributions, capped at $1,500/year per return ($750 married filing separately). Contribute $7,500 a year in total to capture the full credit — more children do not raise the cap. For a typical IN family that offsets a large share of the state income tax line. Best dollar-for-dollar 529 incentive in the country.
- Max your ($24,500 in 2026, $32,500 if 50+) — pre-tax for federal AND IN state AND county. An Indianapolis filer at $110K maxing the 401(k) saves ~$5,400 federal + ~$725 IN state + ~$495 Marion County = ~$6,620 in combined tax annually.
- Max your if you have a qualifying high-deductible plan ($4,400 single / $8,750 family in 2026) — pre-tax for federal AND IN. Most large IN employers (Eli Lilly, Anthem/Elevance, Cummins, IU Health) offer options.
- Backdoor Roth IRA + if your employer's supports after-tax contributions with in-plan conversions — Eli Lilly, Anthem, Cummins, Salesforce Indianapolis all support some version. Can shelter another $40K-$45K annually beyond the $24,500 employee deferral.
- Renters Deduction — $3,000/year deduction off IN taxable income if you rent your primary residence in IN. Worth ~$120-$150 in state + county tax savings. Frequently missed on self-prepared returns.
- Choose your county with intent. The county income tax differential is the single biggest residential tax lever in IN. Hamilton (1.10%) vs Marion (2.02%) is 0.92 percentage points on every dollar of wages. On $150K of household income, that's $1,380/year, every year, for an extra 15-minute commute from downtown Indianapolis. Hancock County (1.94%) and Hendricks (1.70%) are the other commonly-chosen Indianapolis-area lower-rate alternatives.
- File the right nonresidence certificate if you work in a reciprocal state (KY, MI, OH, PA, WI) — skipping it means double-withholding and a refund claim at filing time. Illinois is not reciprocal: an Illinois employer correctly withholds Illinois tax, and you claim Indiana's credit for it on the IT-40.
If you're doing only one thing on this list and you have kids, start with CollegeChoice 529. At 20% credit on the first $7,500 of contributions a year, it's the single best state-level tax break in the country. If no kids, start with the . The General Assembly cuts the rate every year; the harder savings villain is in the mirror, and that one's beatable.
Real questions people actually ask
Q: Will Indiana actually reach 2.9% by 2027?
On the current 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 requires meeting specified revenue triggers — General Fund revenue growth above the prior-year baseline, plus a budget reserve threshold. The schedule has hit every year so far. Normal economic conditions through 2026 should carry the 2.9% step through. A recession could pause a specific step but would not roll back the rate.
Q: How does the CollegeChoice 529 credit actually work?
Unlike most state 529 incentives (which are deductions from taxable income), Indiana offers a 20% tax CREDIT on contributions to Indiana CollegeChoice 529 plans, capped at $1,500 per return ($750 married filing separately) — per return, not per child. So contribute $7,500 to a child's CollegeChoice account → get a $1,500 IN tax credit (nonrefundable — it can reduce your IN state tax to zero, but not below). The credit is not transferable, can't be carried forward, and the contribution must be made by April 15 of the following year. For a typical IN family it offsets half or more of the IN state tax line; it does not reduce the county tax. Best 529 incentive in the country dollar-for-dollar. Only catches: must use Indiana's plan (not Utah's or Nevada's), and the funds must be used for qualified education expenses to avoid recapture.
Q: I live in NW Indiana and work in Chicago. How does that work?
There is no IL-IN reciprocity agreement (Indiana's are with KY, MI, OH, PA and WI). Illinois taxes your Chicago wages as a nonresident — your employer withholds Illinois tax, and you file an IL-1040 with Schedule NR. On your Indiana IT-40 you claim a credit for that Illinois tax, but it only offsets Indiana STATE tax (capped at 2.95% of those wages); your county tax is still due in full. For a Lake County resident that is roughly 4.95% + 1.50% = 6.45% on Chicago wages — about $2,235/year more than an Illinois resident pays on $150K. The real NW Indiana advantage is property tax (~0.85% vs Cook County 2.10-2.50%): on a $400K home that is $5,000-$6,600/year, which still nets a homeowner ahead. The trade-off is the South Shore Line commute or I-90 driving.
Q: Does Indiana tax retirement income?
Partly. Social Security is fully exempt, and military retirement and survivor's benefits have been 100% deductible since 2022. Federal civil service annuitants aged 62+ can deduct up to $16,000 a year (reduced by Social Security received). There is no general retirement income exclusion (unlike Illinois or Pennsylvania, which exempt nearly all retirement income): private pensions, state pensions (PERF/TRF), IRA and distributions are taxed at the 2.95% state rate plus your county rate. Net effect: IN is moderate for retirees — better than NY or NJ, less friendly than IL or PA, and less friendly than KY, whose $31,110 retirement exclusion Indiana has no equivalent of.
Our honest opinion (which is just an opinion)
Quick disclaimer before we get on the soapbox: what follows is one writer's perspective after reading a lot of tax data and talking to a lot of Hoosiers. You're encouraged to disagree.
Indiana is one of the quietest tax success stories in the country. The combination of a low and falling 2.95% flat state rate, constitutional 1% property tax caps that actually hold, the best 529 credit in the country, and reciprocity with five states makes IN unusually competitive for working professionals — especially compared to its high-tax neighbors (IL 4.95%, MI 4.25% plus city tax, OH up to 3.5% plus city tax). The mandatory county tax is the wrinkle that some new residents don't see coming.
The case for staying in (or moving to) Indiana:
- +Flat 2.95% state rate (2026) on a documented schedule toward 2.9% by 2027
- +Mandatory county income tax is the offset — but rates in lower-tax counties (Hamilton 1.10%, Hendricks 1.70%) keep the combined effective competitive
- +Constitutional 1% property tax cap on primary residences — among the most homeowner-friendly structures in the country
- +CollegeChoice 529 20% credit (capped at $1,500 per return) is the best state 529 incentive in the country dollar-for-dollar
- +Reciprocity with KY, MI, OH, PA, WI on wage income (not Illinois — NW Indiana's Chicago case is housing and property tax, not income tax)
- +Cost of living dramatically cheaper than IL or peer Midwest states — Indianapolis median home ~$280K, Fort Wayne ~$230K
- +No estate or inheritance tax. 7% sales tax with no local add-on — clean structure
The case against:
- −Mandatory county income tax (0.5-3%) compounds the state rate — no opt-out, no rural escape
- −Marion County (Indianapolis) 2.02% and Randolph 3.00% are punitive on top of state
- −No general state retirement income exclusion (less retirement-friendly than IL or PA)
- −7% state sales tax is on the higher end for the Midwest
- −Public school funding varies enormously by district — Carmel vs Gary is a different country
Honest take: IN is one of the most competitive Midwest states tax-wise — especially in lower-county-tax counties (Hamilton, Hancock, Hendricks). For Chicago-area professionals, NW Indiana offers a real housing and property-tax arbitrage — but not an income-tax one: with no IL-IN reciprocity, a Chicago job pays Illinois tax plus the county tax. For families with kids in college planning, the CollegeChoice 529 credit is genuinely the best 529 deal in the country and worth restructuring household savings around. For retirees: moderate — IL or PA may be more retirement-friendly depending on income mix. Always check your specific county's rate before signing the lease — the gap between Hamilton (1.10%) and Marion (2.02%) is real money over a career.
Either way: it's your life and your money. We just want you to look at the whole picture instead of the loudest part of it.
What now
Run your numbers in the calculator above. Watch your effective rate, not just the 2.95% headline. Then add your county rate manually — the calculator doesn't model it. Marion (Indianapolis) 2.02%, Hamilton 1.10%, Allen 1.59%, Lake 1.50%, St. Joseph 1.75%, Monroe 2.14%, Tippecanoe 1.28%, Vanderburgh 1.25%.
If you have kids, the CollegeChoice 529 credit is almost certainly the single biggest tax lever available to you. 20% credit on the first $7,500 of contributions means up to $1,500 of state tax saved each year — per return, not per child — which for many households covers half or more of the IN state income tax bill.
If you commute to KY, MI, OH, PA or WI, file that state's nonresidence certificate with your employer so only Indiana withholds. Illinois has no reciprocity with Indiana — expect Illinois withholding, and claim Indiana's credit at filing. If you rent your primary residence, claim the $3,000 Renters Deduction — frequently missed on self-prepared returns.
Sources & further reading
Where the numbers and rules on this page come from. Verify any claim against the primary source before making a decision based on it.
- →Indiana Department of Revenue — Form IT-40 instructions and county tax rate schedule
- →Indiana DOR Information Bulletin #28 — reciprocal states (KY, MI, OH, PA, WI) and the credit for tax paid to other states
- →Indiana DOR Departmental Notice #1 — 2026 county income tax rates
- →Indiana DOR Information Bulletin #98 — 529 savings plan credit (20%, up to $1,500 per return)
- →Indiana CollegeChoice 529 Direct Plan
- →Indiana Constitution Article 10 (Property Tax Caps)
- →Tax Foundation — annual state-and-local tax burden rankings
- →U.S. Bureau of Labor Statistics — Occupational Employment and Wage Statistics
- →IRS — federal brackets per Rev. Proc. 2025-32, contribution limits per Notice 2025-67, Publication 17
A few honest notes
Stuff worth keeping in mind:
- Not personal tax, legal, or financial advice. Run your specific numbers by a licensed CPA, EA, or tax attorney before making meaningful decisions.
- Tax law changes. This guide reflects 2026 IRS schedules and current Indiana DOR rules. The HEA 1001 phase-down trajectory is contingent on annual revenue triggers — the 2.9% rate for 2027 is not yet locked.
- County income tax rates are set annually by each of Indiana's 92 counties. Verify your specific county's current rate at filing.
- Property tax estimates vary — check your local County Assessor's website.
- Numbers are illustrative. Scenarios don't include every credit, deduction, AMT interaction, NIIT, equity-comp wrinkle, or cross-state complication.
- The calculator above doesn't model county income tax — add your county rate manually.
- Reading this page does not create a client relationship.
- No judgment regardless of which county you're in. Indianapolis tech workers, Fort Wayne manufacturers, South Bend academics, NW Indiana Chicago commuters, Bloomington researchers — you're all welcome here.
Based on the current HEA 1001 phase-down step (2.95% for 2026), 2026 IRS schedules per Rev. Proc. 2025-32, and current Indiana DOR county income tax rate schedule. Numbers assume single filer except where noted. This is journalism with a calculator attached, not tax advice. Be kind to yourself in March.
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