How much is Indiana income tax?
Indiana income tax at 3 levels of Indiana taxable income — what is left after Indiana's own deductions and exemptions. Local income taxes are not included.
| Taxable income | Single | Married filing jointly |
|---|---|---|
| $50,000 | $1,4752.9% effective · 2.95% marginal | $1,4752.9% effective · 2.95% marginal |
| $100,000 | $2,9502.9% effective · 2.95% marginal | $2,9502.9% effective · 2.95% marginal |
| $250,000 | $7,3752.9% effective · 2.95% marginal | $7,3752.9% effective · 2.95% marginal |
What is Indiana's income tax rate for 2026?
| Taxable income | Rate |
|---|---|
| All taxable income | 2.95% |
Source: IN DOR — Departmental Notice #1 (Jan 2026), checked September 11, 2026.
Can you deduct Indiana income tax on your federal return?
The federal deduction for state and local taxes (SALT) is capped at $40,400 for 2026 — $20,200 if married filing separately — and the cap shrinks toward $10,000 once modified AGI passes $505,000. A single filer with $250,000 of Indiana taxable income owes about $7,375 in Indiana income tax — 18% of that cap before any property tax.
SALT cap workaroundsDoes Indiana have a pass-through entity tax (PTET)?
Yes. A partnership or S corporation can elect to pay Indiana income tax at the entity level. The business deducts it federally, so that state tax is not limited by the SALT cap, and the owners claim an Indiana credit or exclusion for it. Deductsy's plan treats March 15 as the Indiana election or first-payment deadline; it is approximate, so confirm it with Indiana before relying on it.
PTET savings calculatorWhen are Indiana estimated tax payments due?
Indiana estimated tax is due April 15, June 15, September 15 and January 15 of the following year, in 4 equal instalments. Those are the same dates as the federal schedule. Source: Form ES-40, Indiana DOR Estimated Tax Payment Form 2026 (State Form 46005, R26 / 9-25).
Safe-harbor calculatorWhat is the penalty for underpaying Indiana estimated tax?
Indiana charges a flat 10% of an underpaid instalment, however late it is paid. Paying at least 90% of this year's tax or 100% of last year's (110% if AGI was over $150,000) on time avoids it. Source: Schedule IT-2210, Underpayment of Estimated Tax by Individuals, 2025 (State Form 46002, R27 / 9-25).
Are HSA contributions deductible in Indiana?
Yes. Indiana follows the federal treatment, so an HSA contribution — up to $4,400 with self-only coverage or $8,750 with family coverage for 2026 — lowers Indiana taxable income as well as federal.
Does Indiana give a tax break for 529 plan contributions?
Yes, as a credit rather than a deduction: Indiana gives a state income-tax credit for contributions to Indiana's own 529 plan. Income limits, per-beneficiary caps and carryforwards differ by state, so check the plan's rules.
529 plan tax savings calculatorWhich states have tax reciprocity with Indiana?
Indiana has mutual agreements with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin: neither state taxes the other's residents on wages earned there, so those wages are taxed only where you live. Give your employer the exemption certificate and the state you work in stops withholding. Arizona does not tax wages an Indiana resident earns there — file the exemption certificate with that employer. It runs one way only: Arizona residents who work in Indiana ARE taxed by Indiana, and they claim the credit for it on the Indiana return rather than at home.
What is the property tax rate in Indiana?
Indiana's average effective property tax rate is 0.74% — the 30th highest of 51 jurisdictions and 82% of the national average of 0.9%. That is about $740 a year for every $100,000 of home value; the rate varies widely by county and school district.
Itemize or take the standard deduction?How much does an LLC cost to keep in Indiana each year?
Deductsy budgets about $16 a year for an Indiana LLC — the annual report fee or minimum franchise tax, with a fee due every two years counted at half. Fees change, so confirm with Indiana's business filing office.
Indiana S-corp tax calculatorHow do Indiana taxes compare with neighboring states?
| State | Top income tax rate | Income tax on $100,000 (single) | Property tax (avg) |
|---|---|---|---|
| Indiana | 2.95% | $2,950 | 0.74% |
| Illinois | 4.95% | $4,950 | 2.01% |
| Kentucky | 3.5% | $3,500 | 0.75% |
| Michigan | 4.25% | $4,250 | 1.25% |
| Ohio | 2.75% | $2,366 | 1.31% |
On $100,000 of taxable income a single filer's Indiana income tax is $2,950 — more than in 1 of 4 neighboring states. The lowest is Ohio at $2,366; the highest is Illinois at $4,950. Indiana's average property tax rate is higher than in none of the 4.
Income tax is each state's own tax on the same state taxable income; local income taxes are not included.
More Indiana tax notes
- Every Indiana county adds its own local income tax on top of the state rate.
Tax moves that matter most for Indiana
If you own an S corporation, partnership or multi-member LLC, Indiana's PTET election moves the Indiana income tax on that profit to the business, where it is deductible federally and outside the SALT cap.
An S-corp election can cut self-employment tax once profit is large enough to pay yourself a reasonable salary and still cover payroll and filing costs. The Indiana calculator adds Indiana's own entity fees and taxes to that breakeven.
With 1099 income, a Solo 401(k) can take up to $72,000 a year (2026) — usually more than a SEP-IRA at the same income. Contributions lower both federal and Indiana income tax.
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