Indiana Paycheck Calculator

Indiana imposes a state income tax of 3.05%. Flat rate, decreasing annually. Your actual Indiana tax liability depends on your filing status, deductions, and taxable income.

In addition to Indiana state tax, all workers pay federal income tax (10%—7% progressive brackets) and FICA taxes (7.65% combined). Use our calculator above to see your complete tax breakdown.

Indiana has a flat state income tax rate of 3.05%, which is among the lower flat rates in the nation. The Indiana Department of Revenue administers state taxes. The rate has been gradually decreasing over the years, with a target of reaching 3.0%.

Key Tax Features: Indiana does not have a standard deduction —it uses a deduction equal to the federal standard deduction, meaning the deduction amount changes annually with federal adjustments. Indiana does not tax Social Security benefits. The state offers a homestead property tax deduction for primary residences.

Manufacturing Economy: Indiana has a strong manufacturing base, particularly in automotive (Honda, Subaru, Toyota plants), pharmaceutical, and steel industries. The state has worked to diversify its economy with growth in logistics, healthcare, and technology sectors.

No Local Income Tax: Indiana does not impose local income taxes on wages, though some local units may have property taxes. The state sales tax rate is 7%, which is relatively high compared to neighboring states.

Indiana has been steadily lowering its flat income tax rate, from 3.23% down to 3.05%, with a target of 3.0%. The state is a manufacturing powerhouse, particularly in automotive and pharmaceutical production.