Indiana vs Federal Tax Comparison
| Tax Type | IN State Rate | Federal Rate | Notes |
|---|---|---|---|
| Personal Income Tax | 3.05% flat | Federal: 10–37% | Combined fed+state applies |
| Corporate Income Tax | 4.9% | Federal: 21% | 4.9% flat; phased down from 5.25% |
| State Sales Tax | 7% | No federal sales tax | Combined avg: 7% |
| Capital Gains Tax | 3.05% | Federal: 0–20% | Same as income tax |
About Indiana Taxes
Low flat tax; no local income surtax variation except counties.
Indiana levies income tax at rates from 3.05% flat. The flat rate structure means all taxpayers pay the same percentage, providing simplicity and predictability.
Corporate activity in Indiana faces a 4.9% state corporate tax rate. 4.9% flat; phased down from 5.25%. Combined with the 21% federal corporate rate, businesses should plan accordingly.
Calculate Your Net Salary in Indiana
See federal + IN state tax deductions, Social Security, Medicare, and take-home pay
Open US Salary CalculatorFrequently Asked Questions — Indiana Taxes
What is Indiana's state income tax rate?
Indiana uses a flat 3.05% income tax rate — meaning all taxable income is taxed at the same rate regardless of earnings level. This simplifies filing and is generally favorable for higher earners compared to progressive bracket states.
What is the corporate income tax rate in Indiana?
Indiana imposes a corporate income tax at 4.9%. 4.9% flat; phased down from 5.25%. Businesses should also account for federal corporate tax at 21% on top of the state rate.
What is the sales tax rate in Indiana?
Indiana has a state sales tax of 7%. When local city and county taxes are included, the average combined rate reaches 7%. Rates vary by locality so check the specific municipality for accurate figures.
How does Indiana compare to neighboring states for taxes?
Indiana's overall tax burden ranks favorably among US states. The state levies income tax at up to 3.05%. For individuals evaluating relocation or remote work, comparing the full picture — income, sales, and property taxes — is essential. Use our US Salary Calculator to estimate your net income in Indiana.
Are there any special tax incentives or exemptions in Indiana?
Indiana offers notable tax characteristics: Low flat tax; no local income surtax variation except counties. Businesses and individuals should consult a qualified tax advisor to understand eligibility for available credits, deductions, and incentives specific to Indiana.
Cost of Living in Indiana
Tax rates are only part of the picture — explore city-level cost of living data:
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