Indiana taxes and cost of living (2026)
Indiana has a flat 2.95% income tax. A $100,000 salary is worth about $71,952 a year in national buying power after every tax and Indiana's prices, #21 of 51 (the state average is $70,397). Retiring on $50,000 a year takes about $1.24M, #22 lowest.
- State income tax
- 2.95%
- Sales tax (avg. combined)
- 7.00%
- Property tax (effective)
- 0.74%
- Cost of living
- 93.3
- US = 100
- Social Security taxed?
- No
- Median home
- $244K
Take-home pay in Indiana
Single filer, 10% of salary to a pre-tax 401(k), standard deduction, renting. All taxes include estimated sales tax.
| Salary | Federal | FICA | State + local | All-in tax rate | Take-home | In US dollars |
|---|---|---|---|---|---|---|
| $50,000 | $3,220 | $3,825 | $2,090 | 19.3% | $35,865 | $38,429 |
| $75,000 | $6,020 | $5,738 | $3,159 | 20.9% | $52,584 | $56,342 |
| $100,000 | $10,970 | $7,650 | $4,228 | 23.9% | $67,153 | $71,952 |
| $150,000 | $21,134 | $11,475 | $6,365 | 27.0% | $96,026 | $102,890 |
| $250,000 | $43,304 | $15,514 | $10,640 | 28.8% | $155,542 | $166,660 |
What it takes to retire in Indiana
Married couple, age 60, withdrawals 60% from 401(k)/IRA, 20% Roth, 20% brokerage, no Social Security yet, renting. Spending at US-average prices.
| Spending | At IN prices | Income taxes | All taxes | FI number |
|---|---|---|---|---|
| $40,000 | $37,332 | $1,186 | $2,022 | $962.9K |
| $60,000 | $55,997 | $2,103 | $3,357 | $1.45M |
| $80,000 | $74,663 | $4,022 | $5,695 | $1.97M |
| $120,000 | $111,995 | $8,195 | $10,704 | $3.00M |
Indiana tax rules at a glance
- Income tax: Indiana has a flat 2.95% income tax. Flat 2.95% for 2026 (cut from 3.00% in 2025; scheduled 2.90% in 2027). No standard deduction. $1,000 exemption per taxpayer/spouse; $1,500 per dependent; extra $1,000 each for 65+ or blind, plus $500 more for 65+ with AGI under $40,000. County income tax applies to the same base.
- Local income tax: All 92 counties levy a county income tax on residents, 0.5% (Porter) to 3.0% (Randolph) in the Oct. 2026 DOR notice; Marion 2.02%, Hamilton 1.10%, Allen 1.59%, Lake 1.5%. Unweighted county average is about 2.0%; ~1.8% is a population-weighted estimate (Claude's estimate, not a published figure). SEA 1 (2025) restructures local income taxes starting 2028, including allowing municipal income taxes.
- Social Security: Not taxed. Fully exempt.
- Retirement income: No general retirement income exclusion; pensions, IRA and 401(k) distributions are taxable. Military retirement pay is fully deductible; federal civil service annuity deduction up to $16,000 for age 62+.
- Capital gains: Taxed at the flat rate plus county tax.
- Sales tax: 7.00% state rate, 7.00% average with local taxes; groceries exempt.
Compare Indiana with
Frequently asked questions
Does Indiana have a state income tax?
Indiana has a flat 2.95% income tax. Flat 2.95% for 2026 (cut from 3.00% in 2025; scheduled 2.90% in 2027). No standard deduction. $1,000 exemption per taxpayer/spouse; $1,500 per dependent; extra $1,000 each for 65+ or blind, plus $500 more for 65+ with AGI under $40,000. County income tax applies to the same base.
How much is $100,000 after taxes in Indiana?
A single filer earning $100,000 who puts $10,000 in a 401(k) takes home about $67,153 after federal, state and local income taxes and payroll taxes, an all-in effective rate of 23.9% including estimated sales tax.
Does Indiana tax Social Security?
No. Indiana does not tax Social Security benefits. Fully exempt.
How much do you need to retire in Indiana?
To spend $50,000 a year (at US-average prices) with withdrawals mostly from a 401(k)/IRA, you'd need about $1.24M in Indiana using the 4% rule, after its cost of living and taxes.
Is Indiana expensive to live in?
Indiana's cost of living index is 93.3, where the US average is 100 (BEA Regional Price Parities, 2024). The median home is worth about $243,500 and median rent is $1,104 a month.
How this is calculated
- Income taxes use 2026 federal and state brackets, standard deductions and personal exemptions or credits. No itemized deductions or other credits. Local income taxes use a typical statewide rate (for example, Maryland's county taxes or New York City's); many places have none.
- Payroll taxes include Social Security (6.2% up to the wage base), Medicare, and employee-paid state programs such as California SDI or Washington's paid leave premium. A married household salary is treated as two equal earners for payroll-tax caps.
- Cost of living uses the Bureau of Economic Analysis's Regional Price Parities (2024), where the US average is 100. Spending you enter at national prices is scaled by each state's index.
- Sales tax is estimated as the average combined state and local rate on about a third of spending (more where groceries are taxed). It is shown for context but not added to costs, because the price parities already include it. Property tax applies the state's effective rate to its median home value (Census ACS 2024) if you own.
- Retirement solves for the withdrawal that covers your spending plus the taxes it triggers, using each state's treatment of Social Security, retirement-account withdrawals and capital gains, then multiplies by 25 (a 4% withdrawal rate).
- Years to FI starts from zero, adds what you save each year in that state, and grows it at a 5% real return until it reaches that state's FI number.
Estimates for comparison, not tax advice. Your actual taxes depend on deductions, credits, where in the state you live and more. Sources: BEA Regional Price Parities, Census ACS, state sales tax rates, IRS, state revenue departments (per state).