Indiana state tax: Overview
Indiana has relatively high state income tax rates compared to other states. While the Hoosier State has a flat income tax rate of 3.15%, some Indiana counties impose their own income tax rates as well.
The state's sales and property taxes are reasonable compared to those in other states. However, Indiana's general sales tax rate is relatively high, while the median property tax rate in Indiana is comparatively modest.
[Data for this state tax guide was gathered from a number of sources including the U.S. Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Indiana income tax rate
For 2024, Indiana had a flat rate of 3.15% of state adjusted gross income after modifications. (Counties also levy income taxes.)
Indiana residents will see their flat tax rate decrease from 3.05% to 3% beginning in 2025.
- Social Security benefits are not taxed by the state.
- Starting with the 2024 tax year, all military income will be exempt from state income tax. Military pensions and Railroad Retirement benefits are also exempt.
- All other retirement income is taxed at the 3.15% rate.
- 401(k) and IRA distributions are taxable.
Indiana sales tax
Indiana's state sales tax rate is 7%. There are no local sales taxes in the state.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
How much is property tax in Indiana?
In Indiana, the median property tax rate is 0.84% of owner-occupied housing value, according to the Tax Foundation.
Indiana Property Tax Breaks for Retirees
Indiana offers two property tax breaks for older adults aged 65 or over. One is the "over 65 or surviving spouse deduction" and the other is the state's "over 65 circuit breaker credit."
Indiana gas tax
| Product | Tax Amount |
|---|---|
| Gasoline | 18 cents per gallon |
| Diesel | 16 cents per gallon |
Source: The Sales Tax Handbook
Indiana taxes on alcohol and tobacco
Indiana Tobacco Taxes
| Product | Tax Amount |
|---|---|
| Cigarettes | $1 per pack of 20 |
| Snuff | $0.09 per one-ounce tin |
| Other Tobacco Products | 24% of wholesale price |
Source: The Sales Tax Handbook
Indiana Alcohol Taxes
| Product | Tax Amount |
|---|---|
| Beer | $0.12 per gallon |
| Wine | $0.47 per gallon |
| Liquor | $2.68 per gallon |
Source: The Sales Tax Handbook
Indiana estate and inheritance taxes
There are no estate or inheritance taxes in Indiana.
Related Content
-
Retire in Costa Rica With These Three Tax BenefitsRetirement Taxes Costa Rica may be a good place for retirement if you like the low cost of living and savings for your heirs.
-
Five Ways to Ease Caregiver StressCaregiver stress is real. Here are five techniques to protect your health and happiness while caring for a loved one.
-
Retire in Costa Rica With These Three Tax Benefits
Retirement Taxes Costa Rica may be a good place for retirement if you like the low cost of living and savings for your heirs.
-
Ten IRS Audit Red Flags for Self-Employed IndividualsIRS Audits Taxpayers who file Schedule C with their Form 1040 have a greater chance of an IRS audit
-
Trump Wants You Out of the IRS, But You'll Have to Wait Until MayIRS Some IRS employees won’t be able to resign using the buyout offer until the end of tax season.
-
Are Tips Taxable in 2025? Understanding the IRS RulesTaxable Income With all the recent talk about ending federal taxes on tips, some wonder whether tips are taxable income.
-
What's Going on With New Jersey Property Tax Programs?Property Tax ANCHOR and ‘Senior Freeze’ just got a refresh, and there’s a new program: Stay NJ. Learn how to save on New Jersey property taxes.
-
States That Won't Tax Your Retirement Income in 2025Retirement Taxes Several states don’t tax Social Security benefits, 401(k)s, IRAs, and pensions. But you may still have to pay state taxes on some incomes.
-
Navigating 1099s: A Guide to All 22 IRS Tax Forms to KnowTax Filing You should receive your 1099 form by February 15. But what happens next?
-
Five States With the Largest EITC ChecksEITC Households in these states received a larger Earned Income Tax Credit (EITC) last year.
