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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Massachusetts VS COUNTRY B Indiana

Side-by-side analysis of income tax, effective rates, and take-home pay for Massachusetts and Indiana in 2026.

Daniel · CountryTaxCalc Updated August 2026 Income tax verified October 2026 Tax Comparison 2026
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OVERVIEW
On paper, Indiana's flat 2.95% state rate is well below Massachusetts' flat 5%, saving $734/year at $50,000, $1,759/year at $100,000, and growing to $9,959/year at $500,000 — comparing state rates only. But this comparison comes with the same critical caveat seen in other Indiana comparisons on this site: every one of Indiana's 92 counties levies an additional mandatory income tax ranging from 0.5% (LaGrange County) to 3.38% (Pulaski County), none of which is reflected in the state-only figures above. Using Indiana's own statewide average county rate (about 2.74%), the combined state-plus-county bill at $100,000 rises to roughly $5,634 — actually higher than Massachusetts' $4,680, reversing the headline result for the typical Indiana resident. Only lower-tax counties like LaGrange (0.5%) keep Indiana cheaper than Massachusetts after adding local tax; Marion County (Indianapolis, 2.02%) was previously a near-tie but now runs about $141 more than Massachusetts at $100,000 once its county tax is added to the corrected state figure. Property tax modestly favors Indiana, whose average effective rate (~0.76%) is lower than Massachusetts' (~1.00%). On retirement income, Massachusetts fully exempts Social Security and most government pensions but taxes private pensions and 401(k)/IRA withdrawals at the flat 5% rate, while Indiana exempts Social Security and gives filers 65+ a modest $4,000 deduction on other retirement income before taxing the rest at the state rate plus county tax. Massachusetts' 4% millionaire surtax (9% total) only applies to income above $1,107,750 and doesn't affect any of the income levels shown here.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🏛️
COUNTRY A
Massachusetts
TAX RATE
5-9%
Flat Tax + Millionaire Surtax

Flat 5% on all income, plus a 4% millionaire surtax (9% total) on income above $1 million

🏎️
COUNTRY B
Indiana
TAX RATE
2.95%
Flat Tax + Mandatory County Tax

Flat 2.95% state rate — but every one of Indiana's 92 counties also levies a mandatory 0.5-3.38% county tax

TYPICAL ANNUAL DIFFERENCE
Moving from Indiana → Massachusetts at $100,000
$1,759

That's $147/month back in your pocket

Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.

GROSS INCOME
🏛️ MA TAX
🏎️ IN TAX
SAVINGS
10-YEAR
$50,000
$2,180
$1,446
$734
$7,340
$75,000
$3,430
$2,183
$1,247
$12,470
$100,000
$4,680
$2,921
$1,759
$17,590
$150,000
$7,180
$4,396
$2,784
$27,840
$250,000
$12,180
$7,346
$4,834
$48,340
$500,000
$24,680
$14,721
$9,959
$99,590
💡

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🏛️

Massachusetts Pros & Cons

+ PROS
  • Predictable flat 5% rate (with a surtax only above $1 million) makes budgeting easier than Indiana's county-dependent system, where the true rate varies by where you live
  • Once Indiana's average county tax is added, Massachusetts is actually cheaper at every income level shown — the state-only comparison above overstates Indiana's real-world advantage
  • Fully exempts Social Security and most government pensions from state tax, at any age
  • World-class biotech, finance, and higher-education economy (Moderna, Biogen, Fidelity, State Street, Harvard, MIT) supports high salaries
− CONS
  • Higher state-only rate than Indiana at every income level shown — costing $734 to $9,959/year more using state-tax-only figures
  • Higher average property tax (~1.00%) than Indiana (~0.76%)
  • Private pensions, 401(k), and IRA withdrawals are fully taxed at the flat 5% rate, with no age-based exemption — unlike Indiana's modest $4,000 deduction for filers 65+
  • 4% millionaire surtax (9% total) applies to income above $1 million, a consideration for very high earners that Indiana's flat rate structure doesn't have
🏎️

Indiana Pros & Cons

+ PROS
  • Lower state-only flat rate (2.95%) than Massachusetts (5%), saving $734 to $9,959/year at the state-tax-only level
  • Low-county-tax areas like LaGrange County (0.5%) keep the combined state+county rate well below Massachusetts' flat 5%, even after adding local tax
  • No estate or inheritance tax, and Social Security is fully exempt from state tax
  • Lower average property tax (~0.76%) than Massachusetts (~1.00%) and a generally lower cost of living than Boston-area metros
− CONS
  • Every one of Indiana's 92 counties levies a mandatory income tax (0.5%-3.38%) that isn't reflected in the state-only figures above — even a mid-range county rate can erase the headline advantage over Massachusetts
  • Using Indiana's own statewide average county rate (~2.74%), the real combined bill at $100,000 (about $5,634) is actually higher than Massachusetts' $4,680
  • Pulaski County, Indiana's highest-tax county, brings the combined state+county rate to 6.33% — well above Massachusetts' flat 5%; Marion County (Indianapolis) has a lower nominal combined rate (4.97%) than Massachusetts' 5%, but because Indiana's standard deduction is much smaller, Marion's actual dollar tax at $100,000 (about $4,921) now runs slightly HIGHER than Massachusetts' $4,680
  • Only a modest $4,000 deduction on non-Social-Security retirement income for filers 65+, versus Massachusetts' full exemption of Social Security and most government pensions
FAQ

Frequently Asked Questions

Is Massachusetts or Indiana cheaper for state income tax?

At the state-tax-only level, Indiana is cheaper at every income tested: $734/year at $50,000, $1,759/year at $100,000, and $9,959/year at $500,000. But this comparison excludes Indiana's mandatory county income tax, which applies on top of the state rate in all 92 counties and often erases or reverses this advantage — see the next question.

Does Indiana's county tax change the answer?

Yes, significantly. Every Indiana county adds its own income tax (0.5% to 3.38%) on top of the 2.95% state rate. At $100,000 income (roughly $99,000 taxable after Indiana's own ~$1,000 personal exemption), even LaGrange County's minimum 0.5% rate adds about $495, bringing Indiana's total to roughly $3,416 — still below Massachusetts' $4,680. But Indiana's own average county rate (~2.74%) adds about $2,713, bringing the total to roughly $5,634 — already higher than Massachusetts.

Which Indiana counties still beat Massachusetts even with county tax added?

Lower-tax counties like LaGrange (0.5%) or several other rural counties keep the combined state+county dollar tax below Massachusetts' at most income levels. Marion County (Indianapolis, 2.02%) has a lower nominal combined rate (4.97%) than Massachusetts' 5%, but its actual dollar tax now runs slightly higher than Massachusetts' at $100,000 (about $4,921 vs $4,680), since Indiana's standard deduction is much smaller than Massachusetts'. Pulaski County, Indiana's highest-tax county (3.38%), pushes the combined rate to 6.33% and about $6,267 at $100,000 — well above Massachusetts. Whether Indiana beats Massachusetts for you depends heavily on which specific Indiana county you'd be comparing against — and on running the actual dollar numbers, not just comparing nominal rates.

Which state has lower property tax, Massachusetts or Indiana?

Indiana has the lower average effective property tax rate at roughly 0.76%, compared to Massachusetts' roughly 1.00%. On a $400,000 home, that's about $3,040/year in Indiana versus $4,000/year in Massachusetts — a $960/year difference in Indiana's favor, on top of whatever the county-tax picture works out to.

Does either state tax retirement income like 401(k) and IRA withdrawals?

Massachusetts fully exempts Social Security and most government pensions, but taxes private pensions, 401(k), and IRA withdrawals in full at the flat 5% rate. Indiana exempts Social Security and gives filers 65+ a $4,000 deduction on other retirement income, taxing the remainder at the state rate plus whatever county tax applies. For retirees relying heavily on a government pension, Massachusetts is often more favorable; for those with modest private retirement income in a low-tax Indiana county, Indiana can still win.

How much would I actually save moving from Massachusetts to Indiana?

It depends entirely on the county. Moving to a low-tax county like LaGrange (0.5% county rate) could still save a meaningful amount — about $1,364/year at $100,000 income. Moving to Marion County (Indianapolis, 2.02%) would now typically cost slightly more than staying in Massachusetts (about $141/year more at $100,000), even though its nominal combined rate (4.97%) is below Massachusetts' 5% — Indiana's smaller deduction outweighs that nominal-rate edge. Only in Indiana's higher-tax counties, like Pulaski (3.38%), would you clearly pay more overall than staying in Massachusetts — always check the specific county rate, and the actual dollar figures rather than just the nominal rate, before assuming Indiana is cheaper.

Does Massachusetts' millionaire surtax affect this comparison?

No. Massachusetts' 4% surtax only applies to income above $1 million, pushing the marginal rate to 9% above that threshold. None of the income levels shown in this comparison (up to $500,000) are affected, so the surtax doesn't change any of the figures above — but it's worth knowing for anyone earning above $1 million.

Is Boston or Indianapolis a better place to work?

Boston/Cambridge has a world-class biotech and finance cluster (Moderna, Biogen, Fidelity, State Street) plus elite universities (Harvard, MIT), generally offering higher salary ceilings than Indianapolis. Indianapolis has a solid manufacturing and pharmaceutical base (Eli Lilly) at a notably lower cost of living, which can make its lower tax burden go further even before considering county tax.
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