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.]
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Indiana income tax rate
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
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.
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