Indiana has a dual tax structure similar to Maryland: 2.95% flat state tax PLUS mandatory county tax (0.5-3.0%, varies by county). All 92 Indiana counties levy income tax. You cannot avoid county tax - all IN residents pay it. At $100K income (after standard deduction): 2.95% state + 1.93% average county rate = 4.88% combined, competitive regionally.
How Indiana's state+county tax works: State tax (2.95% flat) is the same for everyone. County tax (0.5-3.0%) varies by which county you live in on Jan 1. Randolph County has the highest rate (3.0%) statewide. Marion County (Indianapolis) is a moderate 2.02% — not the outlier it's sometimes assumed to be. Porter County has the lowest (0.5%). At $100K (after Indiana's own $1,000 personal exemption, taxable=$99,000): Marion resident pays $2,921 state + $2,000 county = $4,921 total (4.97% combined). Randolph resident pays $2,921 state + $2,970 county = $5,891 total (5.95% combined). Porter resident pays $2,921 state + $495 county = $3,416 total (3.45% combined).
Indiana's tax competitiveness: Indiana's state rate is 2.95% for 2026 (2.90% is scheduled for 2027), positioning as business-friendly. But county taxes add 0.5-3.0%, making total burden 3.45-5.95% depending on county. Still competitive vs neighbors: IL 4.95% flat (no county tax), OH 2.75% flat above $26,050 (2026) + local varies, MI 4.25% flat, KY 3.5% flat.
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 | $3,820 | $1,446 | $9,091 | $40,909 | 18.2% |
| $75,000 | $7,670 | $2,183 | $15,591 | $59,409 | 20.8% |
| $100,000 | $13,170 | $2,921 | $23,741 | $76,259 | 23.7% |
| $150,000 | $24,734 | $4,396 | $40,605 | $109,395 | 27.1% |
| $250,000 | $51,304 | $7,346 | $74,164 | $175,836 | 29.7% |
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 $2,921 in state tax alone.
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Why people consider Indiana: a manufacturing and life-sciences job base (steel, auto, pharmaceuticals - Eli Lilly is headquartered in Indianapolis), a low state rate (2.95% plus a county rate of 0.5-3.0%), and a central US location; the $210,000 home price used in this page's property-tax examples is an illustrative assumption, not a reported median. Why people leave: neighbouring states such as Tennessee and Texas levy no wage income tax, and Indiana's job market is smaller than Chicago's. This page does not cite state-to-state migration counts.
| State | Tax Rate | Tax on $100K Income | Difference from Indiana |
|---|---|---|---|
| Indiana | 2.95% flat | $2,921 | Baseline (state only, +county) |
| Illinois | 4.95% flat | $4,805 | +$1,884 (higher) |
| Ohio | 2.75% + local (2026, HB96) | Not verified | n/a (2026 liability not verified) |
| Michigan | 4.25% flat | $3,999 | +$1,078 (higher) |
| Kentucky | 3.5% flat | $3,382 | +$461 (higher) |
Key insight: Indiana's 2.95% flat state tax ($2,921 at $100K) is among the lowest in the region — lower than Illinois ($4,805), Michigan ($3,999), and Kentucky ($3,382), though Ohio's 2026 state-only liability is not verified on this page and may be lower. However, Indiana also charges mandatory county tax (0.5-3.0%) which brings the real combined burden to $3,416-$5,891 depending on county. With the average county rate (~1.93%), total combined is ~$4,832 — about the same as Illinois ($4,805). IL also has higher property tax (1.88% vs IN 0.76%) and higher cost of living. On state+property total at $100K + $210K home: IN $2,921 state + $1,596 property = $4,517 vs IL $4,805 + $3,948 = $8,753 — Indiana wins significantly on property-weighted total.
Bottom line: Indiana's 2.95% state tax is among the lowest flat rates nationally. County taxes (0.5-3.0%) add more, making the real combined rate 3.45-5.95%. Living in low-county-tax counties (Porter 0.5%, Spencer 0.8%) makes IN very competitive. Marion County/Indianapolis (2.02% county) sits in the middle of the range. Nearby counties are lower: Hamilton (1.1%) and Hendricks (1.7%) are roughly $911 and $317 a year cheaper than Marion at $100K, so county choice can matter.
All 92 Indiana counties levy mandatory income tax (0.5-3.0%) in addition to 2.95% state tax. County rate is based on where you live on Jan 1. Highest: Randolph County 3.0%, Cass County 2.95%, Wabash County 2.9%. Marion County (Indianapolis) is a moderate 2.02% — not among the state's highest. Lowest: Porter County 0.5%, Spencer County 0.8%, Hamilton County (Carmel/Fishers) 1.1%. Others: Lake County (Gary) 1.5%, Allen County (Fort Wayne) 1.59%, St. Joseph County (South Bend) 1.75%. At $100K (taxable $99,000): Living in Marion costs $4,921 combined (2.95% + 2.02%) vs Porter $3,416 (2.95% + 0.5%) = $1,505/year difference just from county. Hamilton County is about $911/year cheaper than Marion; Hendricks County (1.7%) about $317/year cheaper.
Depends on county. Illinois has 4.95% flat with NO county tax. Indiana has 2.95% state + 0.5-3.0% county. At $100K (taxable $99,000): IL $4,805 state vs IN $2,921 state - IN saves $1,884 on state tax. But IN's average county tax (about $1,911) adds back. Net: IN $4,832 total vs IL $4,805 - roughly equal on income tax alone (Illinois is $27 lower). HOWEVER: Property tax matters. IL 1.88% avg vs IN 0.76%. On $210K home: IL pays $3,948 property, IN pays $1,596 - IN saves $2,352/year on property. Total income+property: IN $6,428 vs IL $8,753 - Indiana saves $2,325/year overall. Best for: IN if homeowner, IL if renter.
Indiana's state rate is 2.95% for 2026 (2.90% is scheduled for 2027). But Indiana adds mandatory county income tax - all 92 counties levy 0.5-3.0%, making combined total 3.45-5.95% (on taxable income after the personal exemption). The state rate alone understates the full burden. Compare to IL: 4.95% flat, no county tax, simpler. OH: flat 2.75% state (2026, House Bill 96), some cities add local (Cleveland 2.5%, 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: taxable at the 2.95% state rate + county rate (Indiana offers deductions for military retirement pay and certain federal civil service annuities, but no general $4,000 age-65 deduction). At typical retiree income ($40K SS + $40K pension = $80K): $40K SS exempt, pension taxed on $38,000 (after two $1,000 exemptions: the personal exemption plus the additional exemption for age 65 or older) = about $1,889 IN tax (2.4% of the $80K, using Marion County 2.02% + the 2.95% state rate). This is moderate: worse than TN/TX/FL (0%) and IL, which exempts most retirement income. 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: $4,832 income (state+avg county) + $1,596 property (0.76%) + $3,500 sales (7% on $50K) = $9,928 total (9.9%). Compare: Illinois $100K + $210K home: $4,805 income + $3,948 property (1.88%) + $4,125 sales (8.25%) = $12,878 total (12.9%) - IN saves $2,950/year! Ohio's total depends on its 2026 flat-tax liability and local income tax, which this page does not verify. Result: Indiana beats Illinois clearly (lower property tax). IN is best if: You need the Indianapolis job market.
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How we calculate: Indiana uses 2.95% flat state tax PLUS county tax (0.5-3.0%). We apply Indiana's own $1,000 personal exemption for single filers to compute state taxable income, then calculate: state tax (taxable × 0.0295) + county tax (taxable × avg 0.0193 or specific county rate) + federal tax (calculated separately using the $16,100 federal standard deduction). The examplesTable State Tax column is state-only (no county tax), while Total Tax and Take-Home Pay also subtract federal income tax and employee Social Security and Medicare payroll tax (no county tax); comparisonContext and FAQs use the average of the 92 county rates (1.93%) for combined-burden estimates. Data sources: Indiana Department of Revenue (2026 state rate 2.95%, county rates by county), U.S. Census Bureau (migration). Verification: IN's 2.95% flat rate confirmed via live calculator (State Tax = $2,921 at $100K income). County rates (0.5-3.0%) checked against the DOR county tax table (Departmental Notice #1, effective Oct. 1, 2026: Randolph 3.0% highest, Marion 2.02%, Porter 0.5% lowest). Limitations: examplesTable shows state tax only, not including county tax. Actual tax depends on your specific county. Does not include: property tax (0.76% avg), sales tax (7%), renter's deduction, retirement-income deductions.
Last Updated: October 2026
Verified By: Daniel · CountryTaxCalc
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Last Updated: October 2026