Estimate your take-home pay in Indiana. The state applies a single flat income tax rate of 2.95% to taxable wages, so every paycheck gives up the same share to state tax on top of federal withholding, Social Security, and Medicare.
Disclaimer: All figures on this page are estimates for general informational purposes only and are not financial, tax, or legal advice. Tax rates, brackets, and withholding rules change and vary by locality and personal circumstances. Verify current rates with the Indiana Department of Revenue or the IRS, and consult a qualified tax professional before making financial decisions.
Indiana Tax Snapshot
- State Income Tax
- 2.95% top rate
- Sales Tax (state + local avg)
- 7.00%
- Avg Property Tax Rate
- 0.83%
- Median Home Value
- $197,200
- State Minimum Wage
- $7.25/hr
Did You Know?
Indiana's flat state income tax fell to 2.95% for 2026, and all 92 Indiana counties levy their own local income tax on top of it.
Indiana vs. Other Flat-Tax States
Indiana is one of 15 states that apply a single flat rate to taxable wages instead of graduated brackets. Its 2.95% rate is the 3rd-lowest in that group, which runs from Arizona at 2.5% to Idaho at 5.3%.
Measured against all 42 states and jurisdictions that tax wages, Indiana's 2.95% rate ranks 39th-highest and sits below the national median top rate of 5.25%.
For comparison, nearby states line up like this: Illinois (top rate 4.95%); Kentucky (top rate 3.5%); Michigan (top rate 4.25%); Ohio (top rate 2.75%).
How Indiana's Flat Tax Affects Your Take-Home Pay
When you earn a paycheck in Indiana, your employer withholds federal income tax, Social Security (6.2%), and Medicare (1.45%). On top of that, the state withholds income tax based on flat rate of 2.95% (plus county taxes). The state minimum wage is $7.25 per hour, which sets the floor for hourly workers. Understanding these deductions helps you budget effectively and plan for the average 0.83% property tax rate on homes valued around $197,200.
Indiana also levies a combined state and average local sales tax of 7.00%, which affects your overall purchasing power. Factor this into your budget when calculating how far your paycheck stretches.
Where You Live vs. Where You Work in Indiana
Indiana has income tax reciprocity agreements with Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. If you live in Indiana and work in one of those jurisdictions — or the other way round — your wages are taxed only by your state of residence, provided you file the non-residence certificate your employer's state requires. Without that form on file, the work state will withhold anyway and you will have to claim it back.
All 92 Indiana counties levy a local income tax, generally withheld based on your county of residence. Local withholding is separate from the state line on your pay stub, so check it explicitly if you move house or change work location without changing employer.