INDIANA PAYCHECK CALCULATOR
Indiana’s flat state income tax rate dropped to 2.95% for 2026, one of the lowest flat rates in the Midwest. But that number only tells half the story. Every single one of Indiana’s 92 counties charges its own income tax on top of the state rate, so what actually comes out of your paycheck depends heavily on which county you call home, not just which state.
A typical Indiana paycheck gets trimmed by federal income tax, Social Security, Medicare, the flat 2.95% state rate, and your county’s local income tax rate. There’s no state disability insurance or paid family leave tax here. Curious how Indiana stacks up against its neighbors? Check the calculators for Illinois, Kentucky, Michigan, and Ohio.
Calculate Your Take-Home Pay
Estimate only. Does not include your county income tax (0.50% to 3.38% depending on residence, see the county table below), local sales tax, or pre-tax deductions like 401(k) or health insurance. Consult a tax professional for exact figures.
Every Deduction on an Indiana Paycheck
- Federal income tax: Withheld based on your W-4 and the 2026 IRS brackets, which run from 10% to 37% depending on taxable income and filing status.
- Social Security tax: A flat 6.2% on wages up to $184,500 for 2026, capping out at $11,439 for the year.
- Medicare tax: 1.45% on all wages with no cap, plus an extra 0.9% once you cross $200,000 as a single or head of household filer, or $250,000 filing jointly.
- Indiana state income tax: A flat 2.95% on Indiana adjusted gross income, after subtracting your personal exemption.
- County income tax: Every one of Indiana’s 92 counties adds its own rate, from about 0.50% up to 3.38%, based on where you live as of January 1 each year.
- Pre-tax deductions: 401(k) contributions, HSA contributions, and employer health insurance premiums reduce your taxable wages before any of the above taxes are calculated.
Indiana’s Falling Flat Tax and the County Add-On
Indiana has been cutting its flat income tax rate every year for a while now, and it’s not slowing down. House Bill 1001, passed in 2023, locked in a schedule that took the rate from 3.23% down to where it sits today. Then Senate Bill 451, signed into law on April 16, 2025, extended that commitment further, setting up the possibility of rate cuts in 0.05 percentage point increments in even-numbered years starting in 2030, eventually reaching as low as 2.55%, as long as the state hits its revenue growth targets along the way.
Indiana’s Flat Tax Rate, Year by Year
| Tax Year | State Rate |
|---|---|
| 2022 | 3.23% |
| 2023 | 3.15% |
| 2024 | 3.05% |
| 2025 | 3.00% |
| 2026 | 2.95% |
| 2027 (scheduled) | 2.90% |
What keeps Indiana from feeling like a true low-tax state, though, is the second layer nobody outside the state expects: county income tax. All 92 counties impose their own rate on top of the state’s 2.95%, and where you live matters as much as which state you’re in.
Sample County Income Tax Rates (2026)
| County | Local Rate | Combined with State (2.95%) |
|---|---|---|
| Marion County (Indianapolis) | 2.02% | 4.97% |
| Lake County | 1.50% | 4.45% |
| Allen County (Fort Wayne) | 1.48% | 4.43% |
| Hamilton County (Carmel/Fishers) | 1.10% | 4.05% |
An Indianapolis resident and a Hamilton County resident earning the exact same salary end up with noticeably different take-home pay purely because of where they live, even though both pay the identical state rate.
Indiana vs Nearby States at $70,000 (Single)
| State | State Income Tax Owed | Estimated Net Pay |
|---|---|---|
| Indiana (state only, no county) | $2,036 | $56,039 |
| Kentucky | $2,332 | $55,743 |
| Michigan | $2,724 | $55,351 |
| Illinois | $3,320 | $54,755 |
Even after adding a typical county rate, Indiana usually still comes out ahead of Illinois and often Michigan too. A Marion County resident at this income level pays about $3,430 combined state and county tax, which lands between Kentucky and Michigan rather than blowing past them.
Indiana’s Tax Trade-Offs
| Category | Indiana | National Average |
|---|---|---|
| State income tax | Flat 2.95% + county (0.50-3.38%) | ~5.5% |
| Sales tax | Flat 7% statewide, no local add-on | ~7.0% combined |
| Effective property tax rate | 0.76% | ~1.0% |
| Estate/inheritance tax | None (repealed 2013) | Varies by state |
| Property tax caps | 1% homes / 2% rental / 3% commercial (constitutional) | Not common |
Indiana’s constitutional property tax caps are genuinely unusual. A homeowner’s bill can never exceed 1% of assessed value no matter how fast the local market runs up, which gives Indiana residents a level of predictability most states don’t offer. The sales tax sits right around the national average, but it’s notable for being completely uniform, no city or county add-ons anywhere in the state.
Retirees in Indiana
Indiana treats retirement income kindly on most fronts. Social Security benefits are fully exempt from state tax at any income level, and military retirement pay is fully exempt as well. Residents 62 and older can also deduct up to $2,000 of private pension or IRA income, which chips away at what’s otherwise taxable at the flat 2.95% rate plus whatever the county adds. The one thing retirees should factor in is that county income tax still applies to whatever taxable income remains, so a retiree in a higher-rate county won’t see quite the same savings as one in a low-rate county even with identical retirement income.
Federal Tax Bracket Example: $70,000 Single Filer
Start with $70,000 in gross wages. Subtract the 2026 federal standard deduction of $16,100, leaving $53,900 in taxable income. Here’s how the brackets apply:
- 10% on the first $12,400 = $1,240
- 12% on the next $38,000 (from $12,400 to $50,400) = $4,560
- 22% on the remaining $3,500 (from $50,400 to $53,900) = $770
Total federal tax: $6,570, an effective rate of about 9.4% on gross pay. Layer Indiana’s flat 2.95% and a county rate on top of that, and the combined bite still lands lighter than most states with a true progressive income tax system.
Frequently Asked Questions
What is Indiana’s state income tax rate in 2026?
A flat 2.95% on Indiana adjusted gross income, down from 3.00% in 2025. It’s part of a multi-year phase-down that started at 3.23% in 2022 and is scheduled to hit 2.90% in 2027, with the potential for further cuts to as low as 2.55% by the early 2030s if state revenue targets are met.
Why does my Indiana paycheck have two tax lines?
Because Indiana is one of the few states where every one of its 92 counties levies its own income tax on top of the state rate. County rates range from about 0.50% to 3.38% depending on where you live, so your county of residence has a real effect on your take-home pay.
Does Indiana have a standard deduction?
No. Indiana doesn’t use a standard deduction at all. Instead it allows a personal exemption of $1,000 for a single filer or $2,000 for a married couple filing jointly, plus $1,000 for each dependent and an additional $1,500 for each qualifying dependent child.
Is Social Security taxed in Indiana?
No. Indiana fully exempts Social Security benefits from state income tax. Military retirement pay is also fully exempt, and residents 62 and older can deduct up to $2,000 of private pension or IRA income.
How high is sales tax in Indiana?
Indiana charges a flat 7% sales tax statewide with no local additions, one of the few states where the rate is exactly the same everywhere, whether you’re shopping in Indianapolis or a small rural town.
Are Indiana property taxes high?
They run below the national average at an effective rate of about 0.76%, and Indiana’s constitution caps property tax bills outright: 1% of assessed value for owner-occupied homes, 2% for rental and agricultural property, and 3% for commercial property, regardless of how fast local values rise.
The headline flat rate is only ever half the Indiana story. Two people earning identical salaries can take home meaningfully different amounts just based on their county line, which makes it worth checking your specific county’s rate before comparing Indiana to any other state on income tax alone.