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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Texas VS COUNTRY B Indiana

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

Daniel · CountryTaxCalc Updated June 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Texas and Indiana are both low-tax, business-friendly states, but Texas goes further by having no income tax at all. Indiana charges a flat 2.95% state income tax plus a county income tax (averaging 0.9-2.0% depending on county), bringing the combined Indiana burden to roughly 4-5% for most residents. Texas charges zero income tax. On $100,000 income, Texas saves approximately $2,950/year vs Indiana's state-only rate (or $4,000-$5,000/year including county taxes). Both states have high sales tax and Texas has notably higher property taxes. Indiana is one of the most affordable states in the US, while Texas metros vary significantly in cost — Austin has seen dramatic price appreciation, while Dallas and Houston remain more affordable.
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
Texas
TAX RATE
0%
No Income Tax
No state income tax — Texas constitution prohibits personal income tax
🌽
COUNTRY B
Indiana
TAX RATE
2.95%
Flat
2.95% flat state tax plus county income tax
TYPICAL ANNUAL DIFFERENCE
Moving from Indiana → Texas at $100,000
$2,950
That's $246/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
⭐ TX TAX
🌽 IN TAX
SAVINGS
10-YEAR
$50,000
$0
$1,475
$1,475
$14,750
$75,000
$0
$2,213
$2,213
$22,130
$100,000
$0
$2,950
$2,950
$29,500
$150,000
$0
$4,425
$4,425
$44,250
$200,000
$0
$5,900
$5,900
$59,000
💡

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⭐

Texas Pros & Cons

+ PROS
  • Zero income tax: Texas saves $2,950/year on $100k vs Indiana state-only rate
  • Massive job markets: Dallas-Fort Worth, Houston, Austin — booming metros with diverse industries
  • No county income tax: Texas has no additional local income tax layer unlike Indiana
  • Business environment: Texas #1 or #2 nationally for business climate consistently
  • No inheritance tax: Texas has no estate or inheritance tax
− CONS
  • Higher property tax: Texas effective rate ~1.7-2.0% vs Indiana ~0.83% — $3,000-$7,000 more/year
  • Higher housing in Austin: Austin median $500k+ vs Indianapolis $290k
  • Heat and storms: Extreme summer heat in Texas, hurricane risk, 2021 winter grid failure
  • High sales tax: Up to 8.25% combined state and local
  • Homestead exemption required: Must file for homestead exemption to get school tax cap benefits
🌽

Indiana Pros & Cons

+ PROS
  • Low flat tax: 2.95% is one of the lowest flat rates in the US
  • Very affordable: Indiana consistently ranks among the 5 most affordable states
  • Eli Lilly and pharma hub: Indianapolis offers strong healthcare/pharma employment
  • Lower property tax: ~0.83% effective rate vs Texas ~1.8% saves $3,000-$7,000/year on home
  • No inheritance tax: Indiana eliminated its inheritance tax in 2013
− CONS
  • County income tax: Marion County (Indianapolis) adds 2.02%, Hamilton adds 1.1% on top of state 2.95%
  • Smaller job market: Indianapolis ~2.2M metro vs DFW 8M, Houston 7.3M, Austin 2.3M
  • Harsh winters: Significant snowfall and ice storms, average January low 20°F in Indianapolis
  • Lower wage growth: Indiana salary appreciation slower than Texas over past decade
  • Limited industries: Less diversified than Texas across major sectors
FAQ

Frequently Asked Questions

Is Texas or Indiana a better state for low taxes overall?

Texas wins on income tax (0% vs Indiana's 2.95% + county ~1-2%), but Indiana wins on property tax (~0.83% vs Texas ~1.8%) and housing costs (Indianapolis ~$290k median vs Austin $500k+, Dallas $400k). For a $100k earner who rents: Texas saves $2,950-$5,000/year. For a homeowner with a $400k home: Texas pays ~$4,000 more in property tax, reducing net savings to roughly $0-$1,000/year. Texas wins for high earners and renters; Indiana offers a more balanced tax environment for homeowners.

How does Indiana's county income tax work?

Indiana charges both a state income tax (2.95% flat) and a county income tax that varies by county. Marion County (Indianapolis) charges 2.02%; Hamilton County (Carmel/Fishers) charges 1.1%; Hendricks County charges 1.7%. These rates apply to the same taxable income as the state tax. So a Marion County resident earning $100,000 pays: state $2,950 + county $2,020 = $4,970 total. Texas residents pay $0. This makes Texas's advantage over Indiana larger than the state-only figures suggest.

Which state is better for retirees, Texas or Indiana?

Texas is slightly better for retirees on income tax: $0 vs Indiana's 2.95% on retirement distributions. Neither state taxes Social Security. However, Indiana offers a $1,000 Older Taxpayer Credit for those 65+, and retirement income from Indiana state pension plans is exempt. Texas's higher property taxes hurt retirees on fixed incomes, though the Homestead Exemption (school tax ceiling for 65+) helps cap school taxes. For a retiree with $60,000 income: Texas saves ~$1,770/year over Indiana on income tax; Indiana saves $2,000-$5,000/year on property tax. Net result varies significantly by situation.

Austin vs Indianapolis: which is better for young professionals?

Austin: higher salaries (15-25% more in tech), better networking, warmer climate, vibrant nightlife/culture, no income tax — but much higher housing costs ($500k+ median vs $290k) and higher property taxes. Indianapolis: very affordable housing, lower cost of living, strong pharma/healthcare sector, college town energy (near Purdue/IU), lower income taxes than most states — but smaller job market and harsher winters. Budget-conscious young professionals often find Indianapolis offers stronger purchasing power despite lower salaries. Career-ambitious tech workers tend to favor Austin's salary and networking upside.
From the brief
CY0%dividends, 60-day rule
PT20%flat rate, tech workers
GB39%non-dom regime gone
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