Indiana state tax: Overview
Indiana has relatively high state income tax rates compared to other states. That's because while the Hoosier State's flat 3.15% tax rate itself isn't too bad, some counties in Indiana impose their income tax rates as well.
The state's sales and property taxes are reasonable when 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 taxes
Indiana currently has a flat rate of 3.15% of state adjusted gross income after modifications. (Counties also levy income taxes.)
- 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
Property taxes in Indiana
In Indiana, the median property tax rate is .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 taxes (motor fuel)
| Product | Tax Amount |
|---|---|
| Gasoline | 23 cents per gallon |
| Diesel | 57 cents per gallon |
Indiana taxes on alcohol and tobacco
Indiana Tobacco Taxes
| Product | Tax Amount |
|---|---|
| Cigarettes | $1 per pack of 20 |
| Snuff, and Alternative Nictone | $0.40 per ounce |
| Other Tobacco Products | 24% of wholesale price |
| Vapor Products | 15% of gross retail income |
Indiana Alcohol Taxes
| Product | Tax Amount |
|---|---|
| Beer | $0.12 per gallon |
| Wine | $0.47 per gallon |
| Liquor | $2.68 per gallon |
Source: Sales Tax Handbook
Indiana estate and inheritance taxes
There are no estate or inheritance taxes in Indiana.
-
Charitable Remainder Trust: The Stretch IRA AlternativeThe SECURE Act killed the stretch IRA, but a properly constructed charitable remainder trust can deliver similar benefits, with some caveats.
-
Three Ways to Take Control of Your Money During Financial Literacy MonthBudgeting, building an emergency fund and taking advantage of a multitude of workplace benefits can get you on track and keep you there.
-
Retirees Face Significant Tax Bills Due to FraudFraud A new report sheds light on how older adult scam victims end up with big tax bills and lost retirement savings.
-
Tax Day: Is the Post Office Open Late?Tax Filing Tax Day means some people need to mail their federal income tax returns.
-
High Earners: Beware of These Illegal Schemes to Lower TaxesTax Schemes The IRS says high-income filers are targets for several illegal tax schemes.
-
Mailing Your Tax Return This Year? What to Know Before You DoTax Filing There are plenty of reasons not to mail your tax return this year, but here’s what you should know if you are.
-
IRS Warning: Beware of Smishing and 'Helper' Tax ScamsScams Tax season is a time to look out for email and text message scams.
-
Most Expensive States to Live in for HomeownersProperty Taxes High property tax bills make the places on this list the most expensive states for homeowners to live in.
-
Don’t Miss This $2,500 Tax Break for Paying Your Student LoanTax Deductions Do you qualify for the student loan interest deduction this year?
-
How Much Richer Could You Be Without a Big Tax Refund?Tax Refunds A big tax refund isn’t a reason to celebrate if you overpaid throughout the year. Here’s how much money your interest-free loan to the government could have cost you.
