Indiana Tax Guide
3.05%top marginal rate
Indiana has one of the lowest flat income tax rates in the nation at 3.05%. However, counties levy their own additional income taxes. The 7% state sales tax is one of the highest. Property taxes are moderate and capped by constitutional limits.
Indiana Tax at a Glance
Income Tax
3.05%
Flat rate
Sales Tax
7%
State-level rate
Property Tax
0.85%
23% below the national average
Estate Tax
No
No state estate tax
How Indiana Compares to the National Average
Notable Tax Facts
- One of the lowest state-level flat income tax rates at 3.05%
- Counties add their own income tax on top, ranging from 0.5% to 2.9%
- Constitutional cap limits property tax to 1% for homesteads, 2% for other residential, 3% for business
- The 7% sales tax rate is among the highest in the nation
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Indiana Tax FAQ
What is Indiana's income tax rate?
Indiana has a flat state income tax rate of 3.05%. Counties also levy additional income taxes ranging from about 0.5% to 2.9%, so total income tax rates can reach ~6%.
Does Indiana have high sales tax?
Yes. Indiana's 7% state sales tax is one of the highest in the nation. However, the state does not allow local additions, so the rate is uniform statewide.
Are Indiana property taxes capped?
Yes. Indiana's constitution limits property taxes to 1% of assessed value for homesteads, 2% for other residential property, and 3% for business property.
Does Indiana tax retirement income?
Indiana taxes most retirement income, but Social Security benefits are exempt from state income tax.
Compare With Other States
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Educational content, not tax advice. Tax rates are approximate and subject to change. Consult a qualified CPA or tax professional for advice specific to your situation. Data reflects widely-known public information as of early 2026.