State-by-State Guide to Taxes on Middle-Class Families
Tool | November 2021

Indiana State Tax Guide for Middle-Class Families

State tax rates and rules for income, sales, gas, property, cigarette, and other taxes that impact middle-class families.

Indiana

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The Bottom Line
Flag of Indiana

Not Tax-Friendly

The Hoosier State's flat 3.23% income tax isn't too bad (and it's going down in 2023). But many counties in Indiana also impose their own income taxes. The state's general sales tax is high, though municipalities can't tack on their own additional tax. The average property tax rate in Indiana is comparatively modest, which is nice.

Income Tax Range

Indiana has a flat rate of 3.23% of state adjusted gross income after modifications. Counties also levy income taxes.

For 2023 and 2024, the state rate is reduced to 3.15%. If state revenues reach certain thresholds, the state rate will drop to 3.1% for 2025 and 2026, to either 3% or 3.1% for 2027 and 2028, and to either 2.9%, 3% or 3.1% after 2028.

Sales Tax

7% state levy. No local taxes.

Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

In Indiana, the median property tax rate is $833 per $100,000 of assessed home value.

Motor Fuel Taxes

Gasoline: 49.79¢ per gallon (50.79¢ per gallon effective July 1, 2022).
Diesel: 54¢ per gallon (56¢ per gallon effective July 1, 2022).

Sin Taxes

Cigarettes: $1 per pack
Snuff: $0.40 per ounce
Other tobacco products: 24% of wholesale price
Alternative nicotine products: Effective July 1, 2022, $0.40 per ounce
Vapor products: Effective July 1, 2022, 15% of gross retail income

Beer: $0.12 per gallon
Wine: $0.47 per gallon
Liquor: $2.68 per gallon

Annual Car Taxes and Fees

An annual vehicle excise tax based on a car's sticker price (MSRP) and age is imposed.

Estate and Inheritance Taxes

No estate or inheritance tax.