Indiana Tax Calculator 2025
Calculate your Indiana state income tax with our comprehensive 2025 calculator featuring the Hoosier State's simple flat tax rate of 3.23%, standard deductions, and advanced tax planning tools.
Calculate Your Indiana Tax
Enter your income information to calculate Indiana's simple flat state income tax of 3.23% plus applicable deductions and exemptions.
Indiana Tax Structure 2025
Indiana operates one of the nation's simplest income tax systems with a flat rate of 3.23% for all income levels, making it highly competitive for businesses and individuals. The Hoosier State also allows counties to impose additional income taxes.
IN Flat Tax Rate (2025)
- 3.23% flat rate on all income levels
- Simple calculation with no brackets
- Competitive rate for business attraction
- No preferential treatment for capital gains
Standard Deductions (2025)
- Single: $14,650
- Married Filing Jointly: $29,300
- Married Filing Separately: $14,650
- Head of Household: $21,700
Personal Exemptions (2025)
- Taxpayer: $1,000
- Spouse: $1,000
- Each Dependent: $2,500
- Additional 65+ Exemption: $1,500
Indiana County Income Taxes
One unique aspect of Indiana taxation is that all 92 counties impose additional income taxes ranging from 0.5% to 3.38%. These county taxes are in addition to the 3.23% state rate.
County Tax Examples (2025)
- Marion County (Indianapolis): 2.45% county income tax
- Hamilton County: 1.25% county income tax
- Lake County: 3.38% county income tax (highest)
- Allen County (Fort Wayne): 1.35% county income tax
- St. Joseph County: 1.73% county income tax
- Vanderburgh County: 1.70% county income tax
County Tax Determination
Your county income tax is based on your county of residence on January 1st of the tax year, not where you work. County rates can change annually based on local government budgets and voter approval.
Indiana Tax Benefits and Credits
Indiana offers various tax benefits and credits, particularly for working families, students, and seniors. The state focuses on simplicity while providing targeted relief.
- Earned Income Credit: Indiana version of federal EIC for qualifying families
- Child and Dependent Care Credit: Credit for qualifying care expenses
- College Credit: Credit for qualified higher education expenses
- Adoption Credit: Credit for qualified adoption expenses
- Military Pay Benefits: Partial exemption for military pay and retirement
- Retirement Income Deduction: Up to $2,000 deduction for qualifying retirement income
- 529 Plan Deduction: Deduction for contributions to Indiana CollegeChoice plans
- Health Savings Account: Deduction for HSA contributions
Indiana Residency and Tax Planning
Understanding Indiana residency rules and leveraging the state's competitive tax structure can provide significant advantages for tax planning and business development.
Establishing IN Residency
Indiana considers you a resident if your domicile is in Indiana. You're also considered a resident if you maintain a place of abode in Indiana and spend more than 183 days in the state during the tax year.
Business-Friendly Environment
Indiana's flat 3.23% rate, combined with county taxes, creates predictable tax costs for businesses. The state ranks among the top 10 most business-friendly tax climates nationally.
Retirement Considerations
Indiana partially taxes retirement income but offers competitive overall tax rates for retirees. Social Security benefits are not taxed, and there are deductions for other retirement income sources.
Tax Planning Strategies
The flat rate structure eliminates income shifting strategies but makes planning predictable. Focus on maximizing deductions and credits rather than timing income recognition.
Frequently Asked Questions
What is Indiana's income tax rate for 2025?
Indiana has a flat income tax rate of 3.23% for 2025, which applies to all income levels. Additionally, all Indiana counties impose income taxes ranging from 0.5% to 3.38%.
How do Indiana county taxes work?
All 92 Indiana counties impose additional income taxes. Your county tax is based on your county of residence on January 1st. Rates vary by county and can change annually based on local budgets and voter approval.
Does Indiana tax retirement income?
Indiana partially taxes retirement income. Social Security benefits are not taxed, but other retirement income including pensions and IRA distributions may be subject to Indiana tax with a limited deduction available.
Is Indiana tax-friendly for businesses?
Yes, Indiana is considered very business-friendly with its flat 3.23% rate providing predictable tax costs. The state ranks among the top 10 most business-friendly tax climates in the nation.
How does Indiana's flat tax compare to neighboring states?
Indiana's combined state and county rates typically range from 3.73% to 6.61%, which is competitive with neighboring states like Illinois (flat 4.95%) and generally lower than Ohio's progressive rates.
What deductions are available for Indiana taxpayers?
Indiana offers standard deductions, personal exemptions, dependent exemptions, retirement income deductions, 529 plan deductions, and various tax credits including earned income credit and education credits.