Indiana Income Tax Rate for 2026
Indiana has one flat income tax rate of 2.95% for 2026. Examples of Indiana state income tax calculations for Single and Married Filing Jointly statuses are compared.
Indiana has one individual income tax bracket with a statutory flat rate of 2.95% for 2026. The same flat rate applies regardless of filing status, including Single, Married Filing Jointly, and Married Filing Separately. The 2026 tax year covers income earned from January 1, 2026 through December 31, 2026. For calendar-year filers, federal Form 1040 series returns and Indiana Form 40 tax returns are generally due April 15, 2027.
Indiana's personal income tax rate fell from 3.15% in 2023 to 3.05% in 2024, 3% in 2025, and 2.95% in 2026. State law provides for another reduction to 2.9% in 2027. The Department of Revenue's current rate guidance confirms both the 2026 and 2027 rates. Indiana also adopted deductions for qualified tips, overtime, and certain vehicle loan interest for the 2026 tax year only. The tips and overtime FAQ explains those deductions.
County income taxes can add substantially to Indiana's 2.95% state income tax. The county rates effective January 1, 2026 range from 0.5% in Porter County to 3% in Randolph County. Marion County, which includes Indianapolis, uses 2.02%, while Hamilton County uses 1.1%. For Indiana residents, the applicable county generally depends on where the taxpayer lives on January 1. County rates can change during the year. These additional taxes are excluded from the examples on this page.
Examples
Indiana Income Tax Calculation Examples
The goal of these examples is to compare Single and Married Filing Jointly statuses at the same $80,000 annual income per person. The Single example uses $80,000 of household income, while the Married Filing Jointly example assumes each spouse earns $80,000, for a combined $160,000. The results match our All 50 States income tax calculator using $80,000 or $160,000 and the corresponding filing status.
To simplify the calculations, both examples assume full-year Indiana residency, W-2 wages only, no dependents, and taxpayers under age 65 who are not blind or claimed as dependents. Indiana starts with federal adjusted gross income and does not have a standard deduction. The federal standard deduction does not reduce Indiana taxable income either. These examples apply the Indiana personal exemption, with no other deductions, Indiana additions or subtractions, or tax credits. Deductions for rent, property taxes, qualified tips and overtime, and eligible vehicle loan interest are excluded. County income taxes are also excluded. See the All 50 States calculator for a full list of assumptions and sources.
Indiana Filing Status Comparison (2026 Tax Year)
| Tax Metric | Single | Married Filing Jointly |
|---|---|---|
| Household Income | $80,000 | $160,000 |
| Standard Deduction | $0 | $0 |
| Personal Exemption | $1,000 | $2,000 |
| Taxable Income | $79,000 | $158,000 |
| State Income Tax | $2,331 | $4,661 |
| Effective Tax Rate | 2.91% | 2.91% |
| Marginal Tax Rate | 2.95% | 2.95% |
Looking at the table above, we can see that the same 2.95% tax rate applies to both Single and Married Filing Jointly statuses. The personal exemption reduces taxable income by $1,000 per person, leaving both examples with the same 2.91% effective tax rate. Before rounding, the joint tax equals the combined tax of two single filers who each earn $80,000. The $1 difference when doubling the displayed Single tax comes from rounding. Filing jointly therefore produces no Indiana marriage penalty in this simplified comparison. Next, we will review the step-by-step calculations for each filing status.
Step-by-Step Example 1: Single
For a single filer with $80,000 of household income, the 2026 Indiana personal exemption is $1,000. With wages only and no other adjustments, subtracting the exemption gives the Indiana taxable income used to calculate state tax.
- Taxable income: Subtract the personal exemption from household income.
- Estimated Indiana income tax: Multiply taxable income by the flat tax rate of 2.95%.
Indiana effective tax rate: $2,330.50 divided by $80,000 of household income equals 2.91%, rounded. The estimated state income tax rounds to $2,331 in the comparison table.
Indiana marginal tax rate: 2.95%, the rate applied to each additional dollar of Indiana taxable income in this example.
Step-by-Step Example 2: Married Filing Jointly
Now let's apply the same calculation to a married couple filing jointly. Each spouse earns $80,000 with a combined household income of $160,000. The 2026 Indiana personal exemption is $1,000 for each spouse, or $2,000 combined.
- Taxable income: Subtract the combined personal exemptions from household income.
- Estimated Indiana income tax: Multiply taxable income by the same flat tax rate of 2.95%.
Indiana effective tax rate: $4,661.00 divided by $160,000 of household income equals 2.91%, rounded. The estimated state income tax rounds to $4,661 in the comparison table.
Indiana marginal tax rate: 2.95%, unchanged from the Single example.
Takeaway
Indiana Income Tax Takeaways
The flat rate applies to taxable income: Indiana's $1,000 personal exemption reduces the income subject to state tax for each person in these examples. Both households have a 2.91% effective rate, below the 2.95% marginal rate.
Equal income per person produces equal state tax per person: At $80,000 per person, the joint personal exemption, taxable income, and tax are twice the Single amounts before rounding. This simplified comparison shows no Indiana marriage penalty.
County taxes are an additional cost: The state rate and examples do not include county income taxes. County taxes increase the total tax, while eligible deductions, additional exemptions, and credits can reduce the amount owed.
Indiana vs Neighboring States
| State | Tax Year | Tax Rate | Rate Type |
|---|---|---|---|
| Indiana | 2026 | 2.95% | Flat |
| Illinois | 2026 | 4.95% | Flat |
| Kentucky | 2026 | 3.5% | Flat |
| Michigan | 2026 | 4.25% | Flat |
| Ohio | 2026 | 2.75% | Flat |
| Wisconsin | 2026 | 3.5% - 7.65% | Progressive |
FAQ
Frequently Asked Questions
Is Indiana a flat tax state?
Yes. Indiana has a flat individual income tax rate of 2.95% for 2026. The same rate applies to Indiana taxable income regardless of filing status. Exemptions and state deductions can reduce taxable income, so the 2.95% rate generally does not apply to the entire paycheck.
What is the Indiana income tax rate for 2026?
The Indiana state income tax rate for 2026 is 2.95%, down from 3% in 2025. This rate applies after eligible state deductions and exemptions. County income taxes are separate and are added to the state tax.
What is the Indiana marginal tax rate?
The Indiana statutory marginal income tax rate is 2.95% for 2026. Each additional dollar of Indiana taxable income is subject to that state rate. Both Single and Married Filing Jointly use the same rate. County income taxes may also apply, increasing the total tax owed.
What is the Indiana effective tax rate?
The Indiana effective state income tax rate is state income tax divided by household income. Our 2026 Single example at $80,000 and Married Filing Jointly example at $160,000 both produce a 2.91% effective rate. These examples apply personal exemptions and exclude county taxes, deductions, and credits. Different income levels, deductions, exemptions, and credits can produce different effective rates.
Does Indiana have a standard deduction?
No. Indiana does not have a standard deduction for individual income tax. The state starts with federal adjusted gross income, so the federal standard deduction does not reduce Indiana taxable income either.
Does Indiana have a personal exemption?
Yes. Indiana allows a $1,000 personal exemption per taxpayer for 2026, or $2,000 for a married couple filing jointly. These fixed amounts are not adjusted annually for inflation and do not phase out as income rises. A taxpayer can claim the $1,000 exemption even when someone else claims that person as a dependent. Additional exemptions are available for qualifying taxpayers age 65 or older or who are blind.
Does Indiana have a dependent exemption?
Yes. Indiana allows a $1,000 exemption for each qualifying dependent for 2026. Eligibility follows Indiana's dependent rules, which are based on federal law in effect before 2018. Qualifying children and relatives must meet the applicable relationship, residency, support, and other tests.
An additional $1,500 exemption is available for certain dependent children under age 19, or under age 24 if full-time students. For a child's first qualifying year, this additional amount can be $3,000 instead of $1,500. It is not available merely because a different taxpayer claims the child for the first time. A separate $3,000 exemption is available for qualifying adopted children. These exemptions reduce taxable income rather than subtracting their amounts directly from tax owed.
Does Indiana allow deductions for tips and overtime in 2026?
Yes. Indiana allows deductions for qualified tips and qualified overtime compensation for the 2026 tax year only under current law. For full-year residents, the state deductions generally equal the qualifying deductions allowed on the federal return. Federal eligibility rules, income phaseouts, and joint-filing requirements apply.
The tips deduction is capped at $25,000 per return and applies to qualifying tips in occupations that customarily received tips before 2025. The overtime deduction covers the extra half of qualifying time-and-a-half pay required by federal law, rather than all pay for overtime hours. Its limit is $12,500, or $25,000 for Married Filing Jointly. Both deductions begin to phase out above $150,000 of modified adjusted gross income, or $300,000 for joint filers.
Does the Indiana income tax rate include county taxes?
No. The 2.95% rate covers Indiana state income tax only for 2026. Separate county rates effective January 1, 2026 range from 0.5% to 3%. Marion County uses 2.02%, and Hamilton County uses 1.1%. Indiana residents generally use their county of residence on January 1. People who live outside Indiana but have their principal place of work in an Indiana county on that date may also owe county tax.
Does Indiana have a marriage penalty?
Our simplified 2026 comparison shows no Indiana state income tax marriage penalty at $80,000 of annual income per person. The $4,661 joint tax equals the combined tax of two single filers who each owe $2,330.50 before rounding. The joint personal exemption is twice the Single exemption, and both examples have a 2.91% effective rate. Other deductions, credits, or household circumstances can change the result.
Will Indiana's income tax rate decrease in 2027?
Yes. Under current law, Indiana's state income tax rate decreases from 2.95% in 2026 to 2.9% in 2027. Indiana Code 6-3-2-1 establishes the reduction, and the Department of Revenue's rate guidance confirms it. This state rate change does not determine county income tax rates.
References:
- Rates, Fees and Penalties. Indiana Department of Revenue. Confirms the 2.95% state rate for 2026, the 2.9% rate for 2027, and county rate-update timing. Retrieved September 15, 2026.
- Departmental Notice #1, Effective January 1, 2026 (PDF). Indiana Department of Revenue, revision R46 / 01-26. Confirms the 2026 state rate, continuing personal exemptions, and county withholding rates. County examples use this notice's January 1 effective date. Retrieved September 15, 2026.
- Income Tax Information Bulletin #117: Personal Exemptions and Special Rules (PDF). Indiana Department of Revenue, January 2024. Continuing rules for personal, dependent, first-year child, adopted-child, age, and blindness exemptions. Read with the 2026 notice confirming the current allowances. Retrieved September 15, 2026.
- Your Indiana Tax Return Line by Line. Indiana Department of Revenue. Federal AGI starting point, state deductions and exemptions, and separate county tax calculation. Retrieved September 15, 2026.
- Indiana Income Tax Deductions. Indiana Department of Revenue. Specific state deductions, including rent and property taxes, and the 2026-only tips, overtime, and eligible vehicle loan interest deductions. Retrieved September 15, 2026.
- Income Tax Information Bulletin #128: Deductions for Tips, Overtime, and Vehicle Loan Interest (PDF). Indiana Department of Revenue, June 2026. Confirms the 2026-only deductions, federal eligibility limits, and adjustments when income is not fully subject to Indiana tax. Retrieved September 15, 2026.
- Publication 6133: Tips and Overtime Deductions (PDF). Internal Revenue Service, March 2026. Federal eligibility, the overtime premium, deduction caps, income phaseouts, and joint-filing requirements. Indiana adopts these deductions for 2026 only under current state law. Retrieved September 15, 2026.
- 2024 Tax Expenditure Review (PDF). Indiana Legislative Services Agency, Office of Fiscal and Management Analysis. Printed page 1 reproduces the enacted 2023-2027 rate schedule under IC 6-3-2-1. Printed page 31 describes the $1,000 taxpayer and spouse exemptions under IC 6-3-1-3.5(a)(3). Retrieved September 15, 2026.
- Indiana Code, Title 6: Taxation. Indiana General Assembly. IC 6-3-2-1 governs state rates, IC 6-3-1-3.5 governs the income base and exemptions, and IC 6-3-2-31 through 6-3-2-33 govern the 2026-only deductions. Retrieved September 15, 2026.
- 2026 Legislative Synopsis (PDF). Indiana Department of Revenue. Summarizes Senate Enrolled Act 243, Sections 11-13, establishing the 2026 tips, overtime, and vehicle loan interest deductions. Retrieved September 15, 2026.
- Individual Income Tax FAQs. Indiana Department of Revenue. General individual filing requirements and April 15 deadline. Retrieved September 15, 2026.