Income Taxes in Indiana
Indiana's income tax is genuinely simple on the surface -- a flat 2.95% rate on a statutory phase-down -- but its single most relocation-relevant feature is a real county-level local income tax layered on top in every one of the state's 92 counties, ranging from 0.50% to 3.38% depending on exactly where you live.
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Learn moreA low, simple flat rate -- and it keeps getting lower
Indiana levies a flat 2.95% state income tax for 2026 -- a single rate, no brackets, applying the same way to every filer. This is the latest step in a real, statutory, revenue-trigger-dependent phase-down: 3.23% (2022) -> 3.15% (2023) -> 3.05% (2024) -> 3.00% (2025) -> 2.95% (2026), targeting a further step to 2.90% in 2027 if the state's revenue trigger continues to hold. Track whether that 2027 step actually occurs before assuming it's locked in.
Indiana's genuinely distinctive fact: every county adds its own income tax rate
Every one of Indiana's 92 counties levies its own additional county income tax, ranging from a real 0.50% low to a real 3.38% high (Pulaski County, the statewide-high rate for 2026). This is not a minor rounding factor -- it meaningfully changes the effective income-tax burden by destination. Selected 2026 county rates: Marion County (Indianapolis) 2.02%; Hamilton County (Carmel, Fishers, Noblesville) 1.10%; Allen County (Fort Wayne) 1.48%-1.59% depending on source. County income tax is assessed based on county of residence as of January 1, not county of employment -- confirm your specific target county's current rate directly via the Indiana Department of Revenue.
A working-age mover's real combined rate depends on the exact county, not the state rate alone
This record does not let Indiana's low flat state rate stand in for the whole tax story. A mover choosing between Marion County and Hamilton County, for example, is choosing between a combined state-plus-county rate of roughly 4.97% versus roughly 4.05% -- a genuine, budget-relevant difference within the same metro area. Confirm the exact county before comparing Indiana's tax burden to another state's.
A low-tax picture that fits Indiana's broader fiscal story
Indiana's low, simple flat rate and its ongoing phase-down are part of a broader, genuinely low-tax state structure this record backs with specific numbers across the property-taxes and sales-tax topics as well -- rather than a vague, unquantified 'low taxes' label. The county-tax layer is the one piece of that story that genuinely varies by exact destination and deserves specific, per-county research.
Key takeaways
- Indiana's state income tax is a simple flat 2.95% for 2026, on a statutory phase-down schedule from 3.23% (2022) toward a targeted 2.90% (2027).
- Every one of Indiana's 92 counties adds its own income tax (0.50%-3.38%), assessed based on county of residence as of January 1 -- Pulaski County carries the statewide-high 3.38% rate.
- Selected county rates: Marion (Indianapolis) 2.02%, Hamilton (Carmel/Fishers/Noblesville) 1.10%, Allen (Fort Wayne) 1.48%-1.59% -- confirm your specific target county directly.
- Your real combined state-plus-county income tax rate depends on exact destination, not the flat state rate alone -- this is Indiana's most relocation-relevant tax nuance.
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