What is Indiana Income Tax? Rates & Tax Brackets

Updated for tax year 2025.

If you live or work in Indiana, you’ll likely need to file an Indiana state income tax return along with your federal return. Indiana uses a flat state income tax rate, and each of Indiana’s 92 counties also levies its own county income tax.

This guide explains Indiana’s 2025 income tax rate, how Indiana handles deductions and exemptions, county income tax basics, and the updates for the current tax year. When you’re ready to file, TaxAct® automatically applies Indiana’s tax rules to help you accurately prepare your Indiana return alongside your federal return.

What is the Indiana state income tax?

Indiana state income tax is a tax on income earned by individuals. It is collected by the Indiana Department of Revenue (DOR) and helps fund state services.

For tax year 2025, Indiana uses a flat adjusted gross income tax rate of 3% on Indiana taxable income. Indiana adjusted gross income is generally calculated by starting with federal adjusted gross income, adding Indiana add-backs, and subtracting Indiana deductions and exemptions. In addition to the state rate, Indiana’s 92 counties each levy a county income tax ranging from 0.5% to 3%.

Indiana income tax rates and tax brackets

To estimate your Indiana tax bill or refund, it helps to understand the state’s income tax rate. Indiana uses a flat rate of 3% for tax year 2025 rather than graduated brackets. That flat rate applies to all tax filers regardless of filing status:

Filing Status	2025 State Tax Rate
Single/Married filing separately	3%
Married filing jointly	3%
Head of household	3%

If you need more information on how federal tax brackets work, you can use our tax bracket calculator for federal taxes. See the Indiana Department of Revenue for official rate information.

Indiana standard deduction

Indiana does not offer a state standard deduction like the federal return. Instead, Indiana taxpayers reduce Indiana adjusted gross income through Indiana-specific deductions reported on Schedule 2 and personal exemptions reported on Schedule 3.

Taxpayers can claim Indiana deductions such as the itemized deductions allowed on Schedule 2, including certain unreimbursed employee expenses like mileage reimbursement. Beginning in 2024, Indiana allows a deduction for 100% of active-duty military compensation. See the 2025 IT-40 instructions and Schedule 2 for a full list of available deductions.

Indiana exemptions

Indiana allows personal exemptions on Schedule 3 that reduce Indiana adjusted gross income. For tax year 2025, the base personal exemption is $1,000 ($2,000 for married filing jointly). You may also claim $1,000 for each qualifying dependent, plus additional exemption amounts for qualifying dependent children, taxpayers age 65 or older and/or blind, and certain adopted children.

Several types of Indiana tax credits are also available for residents. For instance, taxpayers who donated to an Indiana university or college can claim a credit of $100 or half the amount donated — whichever is less. The credit limit for joint returns is $200. See Schedule 5 and the 2025 IT-40 instructions for other available credits.

Indiana county income tax

Each of Indiana’s 92 counties levies its own income tax, which ranges from 0.5% to 3%. Both residents and nonresidents are subject to county tax on Indiana-source income. See the individual income county tax rates by year in Indiana for your county’s current rate.

Indiana tax changes for 2025

Indiana’s flat tax rate is set to slowly decrease over the next few years, dropping to 3% for tax year 2025, 2.95% for tax year 2026, and 2.9% for tax year 2027.

The 2025 Indiana income tax return due date is April 15, 2026. If you receive a federal extension of time to file, you automatically receive an Indiana extension as well. See the Indiana DOR tax year changes bulletin and extension guidance for details.

FAQs

Does Indiana have a state income tax?

Yes, Indiana has a state income tax. For tax year 2025, Indiana uses a flat adjusted gross income tax rate of 3% on Indiana taxable income, plus a separate county income tax that varies by county.

What is the Indiana income tax rate?

Indiana’s state adjusted gross income tax rate is a flat 3% for tax year 2025. The rate applies regardless of filing status. Indiana county income tax rates are separate and range from 0.5% to 2.95%, depending on where you live or earn income.

What are the Indiana income tax brackets for 2025?

Indiana does not use graduated income tax brackets for 2025. Instead, Indiana taxable income is taxed at a flat 3% state rate. See the Indiana income tax rate table above.

How does Indiana state income tax work?

Indiana state income tax generally starts with your federal adjusted gross income, adds back certain Indiana add-backs on Schedule 1, subtracts Indiana deductions on Schedule 2 and exemptions on Schedule 3 to arrive at Indiana adjusted gross income, then applies the flat 3% state rate. County income tax is calculated separately on Schedule CT-40.

Do I have to file an Indiana state tax return?

You may need to file an Indiana state tax return if you are a full-year Indiana resident whose gross income exceeds your total exemptions, or if you are a part-year resident or nonresident with Indiana-source income. A general rule of thumb for full-year residents is to file if your income is $1,000 or more. Check Indiana Department of Revenue guidance for your situation.

What is the Indiana standard deduction for 2025?

Indiana does not allow a state standard deduction like the federal return. Instead, Indiana taxpayers subtract Indiana-specific deductions on Schedule 2 and personal exemptions on Schedule 3 from Indiana adjusted gross income.

How much is Indiana state income tax?

There isn’t one Indiana state income tax amount that applies to everyone. How much you owe depends on your Indiana adjusted gross income, county of residence, available deductions and exemptions, and credits. For 2025, the state rate is 3%, plus any applicable county income tax.

Why is my Indiana tax return different from my federal return?

Indiana conforms to the Internal Revenue Code as in effect on a fixed date rather than automatically adopting all current federal changes. Indiana requires add-backs for certain federal deductions such as bonus depreciation and has its own deductions, exemptions, and credits that can make your Indiana adjusted gross income different from your federal return.

The good news is that our tax software automatically applies Indiana’s current tax rules when preparing your state return, so you don’t have to calculate these differences yourself.

For more information, visit the Indiana Department of Revenue. If you’d like to learn more about recent federal tax law changes, see our OBBB tax changes guide.

The bottom line

Indiana’s 2025 state income tax is a flat 3% on Indiana adjusted gross income, with separate county income taxes that vary by location. Knowing the state rate, available Schedule 2 deductions and Schedule 3 exemptions, and your county tax rate can help you estimate what you may owe or get back.

When you’re ready to file, TaxAct can help you prepare your federal and Indiana returns in one place so you can file with confidence.

Already filed your taxes and waiting for your refund? Learn more about where your Indiana state tax refund is.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

The OBBB is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or both names used here, but they refer to the same set of tax changes.

Citations

Indiana Department of Revenue. “Individual Income Tax Overview.” Accessed 13 Aug. 2026.
Indiana Department of Revenue. “What are the individual income tax rates and brackets?.” Accessed 13 Aug. 2026.
Indiana Department of Revenue. “Changes for Tax Year 2024.” Accessed 13 Aug. 2026.