How Indiana Taxes Your Paycheck
Indiana uses a flat income tax rate of 2.95%. Every dollar of taxable income above the standard deduction is taxed at the same rate.
Indiana's flat state rate dropped to 2.95% in 2026 (down from 3.0% in 2025) and is scheduled to keep declining. Most workers also pay a county tax of 1–3% on top — the local layer is often larger than the state layer.
Indiana Local Taxes
Every Indiana county imposes a local income tax (CAGIT/COIT/CEDIT) ranging from about 0.5% to 3.4%, depending on the county of residence.
Indiana Job Market Context
Auto manufacturing, pharmaceuticals (Eli Lilly), and steel production around Gary; agriculture is strong throughout the state.
Top Cities in Indiana
The largest population centers in Indiana — and where local tax rates may stack on top of state withholding:
- Indianapolis — 880,000 residents
- Fort Wayne — 269,000 residents
- Evansville — 116,000 residents
- South Bend — 103,000 residents
How Indiana Compares to Neighboring States
Single-filer take-home on a $75,000 annual salary in 2026, federal + state income tax + FICA only:
| State | Take-Home | vs. Indiana |
|---|---|---|
| Indiana (here) | $59,410 | — |
| Illinois | $58,021 | -$1,388 |
| Kentucky | $59,082 | -$328 |
| Ohio | $60,312 | +$903 |
| Michigan | $58,652 | -$758 |
Take-home reflects single filer, no pre-tax deductions; SDI/PFML and local taxes excluded for an apples-to-apples comparison.
Frequently Asked Questions
What's the Indiana state income tax rate?
Indiana has a flat income tax rate of 2.95% for 2026. Whether you earn $40,000 or $200,000, your state tax rate is the same — applied to your taxable income after the standard deduction.
How much is taken out of my paycheck in Indiana?
For a single filer earning $75,000 in Indiana (2026), expect roughly $7,670 in federal income tax, $5,738 in FICA, and $2,183 in Indiana state tax — leaving about $59,410 take-home (20.8% effective tax rate). SDI/PFML and local taxes (if any) come out of that as well.
Do Indiana cities tax wages on top of state tax?
Every Indiana county imposes a local income tax (CAGIT/COIT/CEDIT) ranging from about 0.5% to 3.4%, depending on the county of residence.
Is the Indiana median household income enough to live comfortably?
The 2023 ACS reported a Indiana median household income of about $72,000. Whether that's "comfortable" depends heavily on city — Indianapolis cost of living can differ substantially from rural areas. Use the calculator above to model your specific salary and deductions.
How does this Indiana paycheck calculator work?
We calculate your annualized gross pay based on the pay frequency you select, then apply the 2025 or 2026 IRS percentage method for federal income tax, the Indiana state tax schedule (if any), Social Security, and Medicare. Pre-tax deductions like 401(k) and Section 125 health premiums reduce your taxable base before withholding is computed. You can switch between salary and hourly modes; hourly mode applies time-and-a-half to hours over 40/week prorated by pay period.