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
-
Five Medicare Changes Coming in 2026Learn about the benefits that become permanent features of Medicare in 2026 and how they have been changed or updated since their inception.
-
Discover Which Five States Have AAA Offices Offering Real ID Services. Learn What You Need To Do To Take Advantage of Them.A trip to the DMV can be a painful experience. Skip the line and visit your AAA office to get your REAL ID (select states only).
-
Ten Cheapest Places To Live in New YorkProperty Tax If you’re planning a move in New York, here are the counties with the lowest property tax bills in the Empire State.
-
‘My Etsy Shop is Dead’: Vendors Cry for Help Amid Trump’s TariffsTariffs Small businesses are struggling to thrive as they absorb the Trump administration’s new wave of tariffs.
-
Three Things Star Wars Fans Taught Me About TaxTax Tips May the force be with you and your taxes this Star Wars Day 2025.
-
Retirees: Don’t Miss These Valuable State Tax Breaks in 2025Retirement Planning Selecting the right state for retirement can significantly impact your financial well-being.
-
10 Cheapest Places To Live in FloridaProperty Tax Make your Florida vacation spot a place for daily living — these counties have the lowest property tax bills in the state.
-
Missed Tax Day? Nearly One Million Taxpayers Still Can File and Claim Valuable Tax RefundsTax Refunds As many as one million taxpayers could be missing out on a significant tax refund.
-
Which Generation Pays the Most Tax in the US?Tax Burden Polls show that most people feel like taxes are unfair. But which age group bears the brunt of the tax burden in the United States?
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and DiscountsTax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
