Indiana State Tax Calculator (2026)

How Indiana taxes income

Indiana charges flat 2.95%. State tax is a separate calculation from your federal return rather than a share of it — Indiana sets its own schedule and its own definition of taxable income.

• Rate: 2.95% on all taxable income
• Brackets: A single rate, so no bracket to cross
• Standard deduction: None — the rate applies from the first dollar
• Personal exemption: $1,000 single, $2,000 joint, $1,000 per dependent (not applied here)

Rate figures are as of January 1, 2026 and come from the published Tax Foundation compilation; they have not been independently checked against Indiana Department of Revenue. States do change rates mid-year, so confirm a figure there before relying on it.

What catches people out in Indiana

• Indiana applies one rate of 2.95% to all taxable income, so your marginal and average state rates are the same and extra income does not push you into a higher band.
• Indiana grants no state standard deduction, so its rate applies from the first dollar of taxable income. That is why a low headline rate here is not as low as it looks next to a state with a large deduction.
• Local income taxes are excluded and Indiana's average local rate is 0.35% of AGI, the second highest in the country after Maryland (footnote a). The flat rate fell from 3% to 2.95% on 1 January 2026 and is scheduled to fall to 2.9% on 1 January 2027, then in 0.05-point steps to as low as 2.55% from 2030 if revenue triggers are met.

What this estimate leaves out

Three things are deliberately outside this calculation, because they change more often than annually and a confident wrong number does real damage on a tax page.

• The personal exemption — $1,000 single, $2,000 joint, $1,000 per dependent — is not applied, so the figure runs slightly high.
• Local and city income tax is not included. New York City is the significant one nationally.
• State-specific credits, subtractions and income addbacks are out of scope and can move the result either way.

If you have income in India, Indiana is where treaty relief runs out

States are not parties to the India-US tax treaty, and a state credit for "taxes paid to other jurisdictions" almost always means other US states rather than other countries.

So NRO interest, Indian rental income or a gain on Indian shares can be taxed by Indiana with no credit for the Indian tax deducted at source — even though Form 1116 largely neutralises that same tax federally.

The treatment is not uniform across states, so treat this as the general position rather than as Indiana's confirmed one, and check the credit rules with Indiana Department of Revenue before relying on relief.

Sources

• Tax Foundation — 2026 State Income Tax Rates and Brackets
• Indiana Department of Revenue — the authority for Indiana