Indiana has a flat state income tax rate of 3.15% for 2023, which will decrease to 3.05% in 2024.
However, many counties in Indiana also charge an additional income tax on top of the state rate, with county tax rates ranging from 0.5% to 2.9%.
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The state's sales tax rate is 7%, one of the highest in the Midwest.
Indiana's effective property tax rate is 0.83%, lower than the national average.
Indiana offers a renter's deduction of up to $3,000 for qualified renters.
Homeowners in Indiana can deduct their entire property tax bill from their state income taxes.
Indiana provides a tax credit of up to 20% of contributions made to the CollegeChoice 529 education savings plan.
The state's earned income tax credit is 9% of the federal EITC, providing additional relief for low-income residents.
Indiana allows a deduction of up to $1,000 per child for private school or homeschool expenses.
Non-residents who receive income from an Indiana source are required to file an Indiana state tax return.
Indiana's flat income tax rate applies to both single and joint filers, unlike the federal system which has multiple tax brackets.
The state's income tax brackets have remained unchanged since at least 2001, while the federal brackets are adjusted annually for inflation.
Indiana is one of only nine states that levy a flat income tax rate rather than a progressive, multi-bracket system.
The state's tax revenues are heavily reliant on the flat income tax, which accounts for over 60% of Indiana's total tax collections.
Despite its flat rate, Indiana's income tax burden per capita is slightly above the national average due to its relatively high sales and property tax rates.