Overview
Indiana levies a flat state income tax rate of 2.95% for 2026, reduced from 3.05% in 2025. The rate has been on a scheduled decline: it was 3.23% in 2023, 3.15% in 2024, and is set to continue dropping by 0.10% per year until it reaches 2.90% in 2027, subject to revenue triggers. This ongoing reduction makes Indiana one of the lowest flat-rate income tax states in the country.
A unique feature of Indiana's tax system is the county income tax. In addition to the state rate, nearly every Indiana county levies its own income tax, typically ranging from 0.50% to 3.00%. These county taxes are based on the county where you live (not where you work) and are withheld from your paycheck by your employer. For example, Marion County (Indianapolis) has a county rate of 2.02%, so Indianapolis residents pay an effective combined rate of 4.97%. Allen County (Fort Wayne) is 1.48% combined with the state rate for 4.43%.
Indiana Tax Brackets 2026
| Income Range | Tax Rate |
|---|---|
| All taxable income | 2.95% |
Indiana uses a flat income tax rate of 2.95% on all taxable income, regardless of income level or filing status.
Standard Deductions and Exemptions
| Filing Status | Standard Deduction | Personal Exemption |
|---|---|---|
| Single | N/A | $1,000 |
| Married Filing Jointly | N/A | $2,000 |
| Head of Household | N/A | $1,000 |
| Per Dependent | — | $1,500 |
Understanding Indiana Taxes
Indiana does not offer a standard deduction in the traditional sense. Instead, the state provides a $1,000 personal exemption for each taxpayer and spouse, plus $1,500 per dependent. Indiana also offers various credits and deductions, including a renter's deduction of up to $3,000 of rent paid (which reduces taxable income, not a dollar-for-dollar credit) and a $500 additional exemption for taxpayers 65 and older.
Indiana taxes Social Security benefits only to the extent they are included in federal adjusted gross income — since most recipients pay little or no federal tax on Social Security, the practical impact is minimal. Military retirement pay is fully exempt from Indiana income tax.
The state sales tax is a flat 7.00% with no local additions, making it one of the simplest sales tax structures in the country. Groceries (unprepared food) and prescription drugs are exempt. The 7% rate is relatively high compared to the national average.
Property taxes in Indiana average about 0.81%, right around the national average. Indiana caps property taxes as a percentage of assessed value: 1% for homesteads, 2% for other residential and agricultural, and 3% for commercial. These caps provide predictable limits on property tax bills regardless of assessment changes.
Filing Tips for Indiana
Check your county's income tax rate — it can add up to 3% on top of the state rate, significantly affecting your take-home pay
If you rent in Indiana, claim the renter's deduction of up to $3,000 of rent paid on your state return
Indiana's state rate is scheduled to drop to 2.90% in 2027 — plan for slightly more take-home pay each year
Property tax caps (1% for homesteads) provide predictable limits on your property tax bill
State Revenue Authority
For the most current tax information, visit the official Indiana tax authority:
in.gov/dorRelated Calculators
Frequently Asked Questions
For educational purposes only -- not financial or tax advice. Tax rates shown are based on 2026 data and may not reflect recent changes. Consult a tax professional for your specific situation.