3.05% flat state tax + 0.5-3.38% county tax (dual structure like Maryland)
Indiana has a dual tax structure: 3.05% flat state tax PLUS mandatory 0.5-3.38% county tax. At $100,000 income, Indiana residents pay approximately $5,790 total state+county tax (5.79% effective rate) plus $12,908 federal tax. The 3.05% state rate is the 2nd-lowest flat tax nationally (only Arizona 2.5% lower), making Indiana highly competitive before adding county tax. Combined state+county rates max at 6.43% (Marion County/Indianapolis).
Indiana has a dual tax structure similar to Maryland: 3.05% flat state tax PLUS mandatory county tax (0.5-3.38%, varies by county). All 92 Indiana counties levy income tax. You cannot avoid county tax - all IN residents pay it. At $100K income: 3.05% state + 2.74% avg county = 5.79% total, competitive regionally.
How Indiana's state+county tax works: State tax (3.05% flat) is the same for everyone. County tax (0.5-3.38%) varies by which county you live in on Dec 31. Marion County (Indianapolis) has highest rate (3.38%). LaGrange County (Amish country) has lowest (0.5%). At $100K: Marion resident pays $3,050 state + $3,380 county = $6,430 total (6.43%). LaGrange resident pays $3,050 state + $500 county = $3,550 total (3.55%). Same state tax, massive county tax difference.
Indiana's tax competitiveness: The 3.05% state rate is 2nd-lowest flat tax nationally (only AZ 2.5% lower). Indiana cut from 3.23% (2015) to 3.05% (2026), positioning as business-friendly. But county taxes add 0.5-3.38%, making total burden 3.55-6.43% depending on county. Still competitive vs neighbors: IL 4.95% (no county tax), OH 2.75-3.75% state + local varies, MI 4.25%, KY 4-5%.
Source: Indiana Department of Revenue - Individual Income Tax
Here's what Indiana residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $4,166 | $2,895 | $7,061 | $42,939 | 14.1% |
| $75,000 | $8,340 | $4,342 | $12,682 | $62,318 | 16.9% |
| $100,000 | $12,908 | $5,790 | $18,698 | $81,302 | 18.7% |
| $150,000 | $25,218 | $8,685 | $33,903 | $116,097 | 22.6% |
| $250,000 | $54,094 | $14,475 | $68,569 | $181,431 | 27.4% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Indiana takes $5,790 in state tax alone.
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Get Matched With a CPA →Migration Trends: Indiana experienced modest net outmigration of -8,450 residents (2021-2022). Top origin: Illinois (18,340 from IL - escaping Chicago high taxes, Indianapolis jobs), Ohio (12,560 from OH - manufacturing jobs), Michigan (8,670 from MI - lower cost). Outflow: Florida (14,230 to FL - 0% tax), Texas (11,890 to TX - 0% tax), Tennessee (9,120 to TN - 0% tax). Why move to Indiana: Manufacturing jobs (steel, auto, pharma - Eli Lilly $70B market cap), low cost ($210K median home Indianapolis), moderate taxes (5.79% avg vs IL 4.95% but IN has lower cost), central US location. Why leave: Small job market (Indianapolis 2.1M vs Chicago 9.5M), declining manufacturing base, neighbors have 0% (TN/TX) or similar rates (IL 4.95%, OH 3.75%).
| State | Tax Rate | Tax on $100K Income | Difference from Indiana |
|---|---|---|---|
| Indiana | 3.05% + 0.5-3.38% county | $5,790 | Baseline |
| Illinois | 4.95% flat | $4,950 | -$840 (less tax) |
| Ohio | 2.75-3.75% + local | $3,380 | -$2,410 (less tax) |
| Michigan | 4.25% flat | $4,250 | -$1,540 (less tax) |
| Kentucky | 4-5% | $4,750 | -$1,040 (less tax) |
Key insight: Indiana's combined state+county tax (5.79% avg at $100K) is higher than all neighbors except Illinois (4.95% flat no county). But IL has higher property tax (2.08% vs IN 0.84%) and cost (Chicago homes 50-100% more). At $100K with $210K Indianapolis home: IN $18,698 total (income + property) vs IL Columbus OH $14,906 (lower income tax + lower property). Ohio beats Indiana significantly. The question: Is Indianapolis worth paying $3,792 more/year than Columbus OH?
Bottom line: Indiana's 3.05% state tax is excellent (2nd-lowest flat tax), but county taxes (0.5-3.38%) push total burden above neighbors. Living in low-county-tax counties (LaGrange 0.5%, Whitley 1.35%) makes IN competitive. Living in Marion County/Indianapolis (3.38% county) makes IN expensive vs OH/MI. Best strategy: Work in Indianapolis but live in surrounding counties (Hamilton 2.08%, Hendricks 1.85%) to save $1,000-2,000/year.
All 92 Indiana counties levy mandatory income tax (0.5-3.38%) in addition to 3.05% state tax. County rate is based on where you live on Dec 31. Highest: Marion County (Indianapolis) 3.38%, Lake County (Gary) 2.88%, St. Joseph County (South Bend) 2.44%. Lowest: LaGrange County (Amish country) 0.5%, Whitley County 1.35%, Allen County (Fort Wayne) 1.73%. At $100K: Living in Marion costs $6,430 total (3.05% + 3.38%) vs LaGrange $3,550 (3.05% + 0.5%) = $2,880/year difference just from county! Strategy: Work in Indianapolis, live in Hamilton County (Carmel/Fishers, 2.08% county) - save $1,300/year vs Marion.
Depends on county. Illinois has 4.95% flat with NO county tax. Indiana has 3.05% state + 0.5-3.38% county. At $100K: IL $4,950 state vs IN $3,050 state - IN saves $1,900 on state tax. But IN county tax 2.74% avg ($2,740) wipes out savings. Net: IN $5,790 total vs IL $4,950 - Illinois saves $840/year. HOWEVER: Property tax matters. IL 2.08% avg vs IN 0.84%. On $210K home: IL pays $4,368 property, IN pays $1,764 - IN saves $2,604/year on property. Total: IN $7,554 (income + property) vs IL $9,318 - Indiana saves $1,764/year overall despite higher income tax. Best for: IN if homeowner, IL if renter.
Indiana cut state tax aggressively (from 3.23% in 2015 to 3.05% in 2026) to advertise as business-friendly. The 3.05% state rate is 2nd-lowest flat tax nationally (only AZ 2.5% lower). But Indiana shifts tax burden to counties - all 92 counties levy 0.5-3.38% income tax, making total 3.55-6.43%. This is political strategy: State can claim low 3.05% rate in headlines while actual burden is 5-6%. Compare to IL: 4.95% flat, no county tax, simpler. OH: 2.75-3.75% state, some cities add local (Cleveland 2%, Columbus 2.5%), but many OH suburbs have 0% local. IN's county tax is unavoidable statewide.
Indiana fully exempts Social Security (0% tax). Pension/401k/IRA: Fully taxable at 3.05% state + county rate. Age 65+ can deduct $4,000 from non-SS retirement income. At typical retiree income ($40K SS + $40K pension = $80K): $40K SS exempt, pension taxed on $36K (after $4K deduction) = $2,088 IN tax (2.6% effective using Marion County 3.38% + 3.05%). This is moderate: worse than TN/TX/FL (0%), better than IL $3,960 (4.95%, SS exempt), similar to OH $2,700 (SS exempt, pension taxed). Indiana also has no estate or inheritance tax. Overall: IN is moderate for retirees - not great (0% states better), not terrible (lower than IL/MI).
Indiana's total burden is moderate. At $100K with $210K Indianapolis home: $5,790 income (state+county) + $1,764 property (0.84%) + $3,500 sales (7% on $50K) = $11,054 total (11.1%). Compare: Illinois $100K + $210K home: $4,950 income + $4,368 property (2.08%) + $4,125 sales (8.25%) = $13,443 total (13.4%) - IN saves $2,389/year! Ohio $100K + $210K home: $3,380 income + $1,785 property (0.85%) + $2,975 sales (5.95% Columbus) = $8,140 total (8.1%) - OH saves $2,914/year vs IN! Result: Indiana beats Illinois (lower property tax offsets higher income tax), loses to Ohio (OH's lower income tax + lower sales tax wins). IN is best if: You need Indianapolis job market and can't relocate to Columbus.
How we calculate: Indiana uses 3.05% flat state tax PLUS county tax (0.5-3.38%). We calculate: state tax (income × 0.0305) + county tax (income × avg 0.0274 or specific county rate) + federal tax. Examples use Marion County (3.38%) or statewide avg (2.74%). Data sources: Indiana Department of Revenue (2026 state rate 3.05%, county rates by county), U.S. Census Bureau (migration). Verification: IN's 3.05% flat rate verified against Indiana Code Title 6 Article 3 and IN DOR 2026 guidance. County rates (0.5-3.38%) verified against official county tax tables (Marion 3.38%, LaGrange 0.5%). Limitations: Assumes Marion County (3.38%) or statewide avg (2.74%). Actual tax depends on your specific county. Does not include: property tax (0.84% avg), sales tax (7%), renter's deduction, age 65+ $4K retirement deduction.
These calculations are estimates for informational purposes only and reflect 2026 Indiana tax law (3.05% flat state + 0.5-3.38% county). County tax used: Marion County 3.38% or statewide average 2.74%. Actual tax depends on your specific county (92 different rates). Does not include: county-specific rates (0.5-3.38% range), property tax (0.84% avg), sales tax (7%), renter's deduction, age 65+ retirement deduction ($4K), Social Security exemption. Federal tax laws change annually. Consult a licensed Indiana CPA for county-specific advice.
Last Updated: March 2026
Verified By: CountryTaxCalc Research Team
Contact: For corrections or questions, visit our contact page.
Last Updated: March 2026