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Indiana State Tax

Indiana State Tax There are a number of taxes applicable to the state of Indiana, which includes one of the highest sales tax rates in the nation.

Indiana state sales tax – 7%, food and drugs exempt.  Increased to compensate for capping property taxes.

Indiana personal income tax 

3.4% of federal adjusted gross income, flat tax

Tax returns are due on April 15

There are 92 counties in Indiana, each with a unique tax rate for residents and non-residents.  These taxes can range from less than 1% to slightly over 3%.  Information on these tax rates is available from the State of Indiana Department of Revenue.  The highest rate is Pulaski County, at 3.14%, followed by Jasper County at 3.05%.

Indiana property taxes

Fund local governments but approved by state

No more than 1% of property value

2% cap on farmland, rentals

Indiana excise taxes

Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes. 

Funds road repair and health programs

$.99 tax on cigarettes

$2.68 tax per gallon of liquor

Indiana inheritance tax 

There are no inheritance taxes on estates left to spouses or charitable organizations.  Parents and children can be exempted on estate taxes, up to $100,000 each.  Brothers, sisters and their children re exempted up to $500 each.  There are also no taxes on amounts paid to other beneficiaries totaling less than $100.  Any amounts exceeding the exemptions must be reported to the state on Form I-H6.  This also applies to non-residents as well as residents of Indiana.

Indiana payroll taxes

State Disability Insurance – none

State Unemployment Insurance - .565% to 8.362%

Exemptions

$1,000 exemptions for

Federal exemptions

Persons age 65 and older

Persons suffering from blindness

There is a $1,500 tax exemption for some children and an addition $500 exemption for seniors with an income less than $40,000.

Taxable income

Wages

Salaries

Commissions

Tips

Interest

Dividends

Royalties income

Rental income

Farm income

Business income

Pensions

Annuities

Partnership/shareholder income

Gain from sale of property

Corporate income tax - 6.5%

Misc

Social Security, railroad retirement and life insurance benefits are not taxed under Indiana law.  Gaming winnings from the lottery, casinos or horse racing are taxed.

Military personnel receive a 180 day extension to file taxes upon leaving a combat zone.  They must write “combat zone” on the tax form above their social security number.  Property tax depends on the county but will generally not be assessed for those that did not reside in the county at the start of the year.

Tax forms need not be filed if the exemptions exceed gross income.  Any income that was withheld to pay taxes can be claimed as a refund by this resident.  One should notify the Indiana tax authorities if this is the case to ensure that you truly do not need to file a tax return and how you can claim your tax refund.  

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