Indiana Income Tax Calculator

How to Use This Indiana Income Tax Calculator

This Indiana income tax calculator estimates your annual state and federal tax liability for 2025 and 2026. Enter your gross income, filing status, and any pre-tax deductions, then select your Indiana county in the Locality dropdown. Selecting your county is critical — county CAGIT rates range from 0.5% to 2.02% and can significantly affect your total tax bill.

For a per-paycheck breakdown, use the Indiana paycheck calculator. To compare Indiana with other states, use the general income tax calculator.

How Indiana State Income Tax Works

Indiana uses a flat 2.95% state income tax rate on all Indiana taxable income. The calculation is straightforward:

1. Start with Indiana AGI — generally federal AGI, meaning wages minus pre-tax 401(k), health insurance, and HSA contributions.
2. Subtract the $1,000 personal exemption — per filer ($1,000 each for married filing jointly = $2,000 total). No standard deduction.
3. Multiply by 2.95% — the flat state rate produces Indiana income tax.
4. Subtract $40 per dependent — the dependent credit reduces tax owed directly.

Indiana's flat rate has been declining: 3.23% in 2022, 3.15% in 2024, 3.05% in 2025– 2026, with further reductions planned. This trend makes Indiana increasingly competitive among neighboring Midwest states.

Indiana County Income Tax — CAGIT

Indiana's County Adjusted Gross Income Tax (CAGIT)is a second layer of income tax levied by each of Indiana's 92 counties. Key features:

• Based on county of residence— unlike most local taxes, CAGIT follows where you live on January 1 of the tax year, not where you work. A suburban Indianapolis resident who commutes to Marion County to work owes their residential county's rate, not Marion County's 2.02%.
• Applied to Indiana AGI — pre-tax 401(k) and Section 125 deductions reduce the CAGIT base. The personal exemption does not reduce the CAGIT base (only the state tax base).
• Employer withholds at county rate — your employer withholds CAGIT based on the county listed on your Indiana WH-4 form. Update it when you move.

Combined state+county effective rates (2026)

• Marion County (Indianapolis): 3.05% state + 2.02% county = 5.07% combined
• Allen County (Fort Wayne): 3.05% + 1.48% = 4.53% combined
• Hamilton County: 3.05% + 1.10% = 4.15% combined
• Porter County: 3.05% + 0.50% = 3.55% combined

FICA Taxes — Social Security and Medicare

FICA is federal and applies to every Indiana income earner:

• Social Security: 6.2% on wages up to $176,100 (2025) or $184,500 (2026). No further withholding once you hit the wage base.
• Medicare: 1.45% on all wages with no cap.
• Additional Medicare: 0.9% on wages above $200,000 (single) or $250,000 (married jointly) — employee only, no employer match.

Step-by-Step Example — $85,000 Hamilton County Single Filer (2026)

1. Gross wages: $85,000
2. Federal standard deduction: −$16,100 → federal taxable income: $68,900. Federal income tax: ~$10,900.
3. FICA: 7.65% × $85,000 = $6,503.
4. Indiana state tax: ($85,000 − $1,000 exemption) × 2.95% = $2,562.
5. Hamilton County CAGIT: 1.1% × $85,000 (Indiana AGI) = $935.
6. Total taxes: $10,900 + $6,503 + $2,562 + $935 = $20,900
7. Annual net income: $85,000 − $20,900 = $64,100

How to Reduce Your Indiana Annual Tax Liability

• Maximize traditional 401(k) contributions— the 2026 limit is $23,500 ($31,000 if 50+). At Indiana's combined 5.07% Marion County rate + 22% federal, every $1,000 contributed saves about $270.70 in combined taxes.
• Contribute to an HSA — $4,300 (self-only) or $8,550 (family) in 2026. Reduces Indiana AGI and avoids FICA when contributed through payroll.
• Indiana CollegeChoice 529 contributions— contributions to Indiana's 529 plan earn a 20% Indiana tax credit (up to $1,500 credit for $7,500 in contributions). This is a direct credit against Indiana income tax, not a deduction — one of the best 529 incentives in the country.
• Claim the retirement income deduction if 62+ — Indiana allows a $2,000 deduction on private retirement income (401(k), IRA, pension distributions) for taxpayers age 62 or older, reducing both state tax and county CAGIT.
• Update your Indiana WH-4— Indiana's state withholding form. File an updated form whenever your marital status, number of exemptions, or county of residence changes. Correct withholding prevents unexpected bills or large refunds.

Tax Disclaimer

This calculator provides estimates for informational purposes only. It is not tax advice. Indiana flat rate, county CAGIT rates, and federal rules change annually. County rates are updated each year by the Indiana Department of Revenue. Consult a qualified Indiana-licensed CPA or tax professional for your specific situation.