2026 Indiana State Income Tax
Effective 2026-04-28
Indiana has a statutory flat income tax of 2.95% for tax year 2026, scheduled to drop to 2.9% in 2027. The state has no standard deduction; instead it uses a $1,000 personal exemption per taxpayer.
The 2026 Indiana rate
2.95%
Indiana standard deduction (or personal exemption)
The amount Breakeven subtracts from federal AGI before applying the 2.95% rate, by filing status:
| Filing status | Indiana subtraction |
|---|---|
| Single or Married filing separately | $1,000 |
| Married filing jointly | $2,000 |
| Head of household | $1,000 |
Worked examples (Single filer)
| Federal AGI | Indiana taxable | Indiana tax |
|---|---|---|
| $40,000 | $39,000 | $1,150.50 |
| $80,000 | $79,000 | $2,330.50 |
| $150,000 | $149,000 | $4,395.50 |
| $300,000 | $299,000 | $8,820.50 |
The 2024 → 2027 phasedown schedule
HEA 1001 (2023) put Indiana on a four-year glidepath: 3.05% (2024), 3.00% (2025), 2.95% (2026), and 2.9% (2027 and beyond). The reductions are statutory, not revenue-trigger-based, so 2026 at 2.95% is the firm answer unless the legislature passes a new bill.
The Indiana personal exemption
Indiana does not offer a state-level standard deduction. Instead, it allows a $1,000 personal exemption per taxpayer (so $2,000 for MFJ households where both spouses file) plus another $1,000 per dependent. The calculator models the per-taxpayer exemption ($1,000 single, $2,000 MFJ) but does not factor in dependent exemptions, so households with kids will see slightly over-projected Indiana tax. The $1,500 additional exemption for filers age 65+ or blind is also not modeled.
Indiana county income taxes (LIT)
Every Indiana county levies its own Local Income Tax (LIT) ranging from 0.5% to 3%. Marion County (Indianapolis): 2.02%. Hamilton County: 1.1%. Lake County: 1.5%. The LIT applies on top of the 2.95% state rate, with your home county's rate generally controlling. The calculator projects the state portion only; your paystub will show LIT as a separate line. See the IT-40 instructions for the current county rates.
How Indiana stacks with federal tax
Indiana state tax is owed on top of federal income tax. The Breakeven calculator projects both numbers from your year-to-date paychecks once you select Indiana as your state. For the federal side, see the 2026 federal brackets.
Sources
- Indiana Department of Revenue — Individual Income Taxes — authoritative source for the rate and Form IT-40.
- Tax Foundation — State Individual Income Tax Rates — annual cross-reference for state-tax structure and rate stability.
Note on local taxes and SDI. The calculator projects Indiana state income tax only. It does not include municipal or county income tax (where the state allows them) or state payroll surcharges like SDI / paid family leave. If you live or work somewhere with a local income tax, or in a state with an SDI surcharge, your real paycheck withholding will be higher than projected. See the methodology for the full list.
Last cross-checked on 2026-04-28. Verify with the Indiana Department of Revenue if it matters.
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Canonical reference: https://www.breakeven.tax/brackets/2026/indiana