Indiana · 2027 and beyond
Indiana in 2027 and beyond: what is already law, and what is still open
No tax measure on the ballot. The state rate is 2.95% for 2026 and 2.9% for 2027, the last scheduled step. What is on the 2026 return, what starts with tax year 2027, and what is scheduled or conditional after that.
By Charles Trautman, EA, editor
Need to Know Tax · written from Indiana Department of Revenue sources and the unofficial November 3 election returns, November 12, 2026 · not yet reviewed by an Indiana practitioner
No tax measure on the ballot. The state rate is 2.95% for 2026 and 2.9% for 2027, the last scheduled step. This page keeps apart three things that get mixed together in the news: what is on the 2026 return you file in early 2027, what begins with tax year 2027, and what is scheduled, conditional or still undecided after that. Election figures are the unofficial November 3, 2026 returns and are not final until the state certifies them.
What the voters decided on November 3, 2026
No statewide tax measure was on the November 3, 2026 ballot in Indiana. Nothing voted on that day changes a Indiana return.
This return, next year, and later
| When | What applies |
|---|---|
| The 2026 return, filed in early 2027 | The state rate is 2.95%; county income tax is added on top. |
| Indiana allows deductions for tips, overtime and car-loan interest for 2026 only. | |
| The threshold for withholding on gambling winnings is $2,000, up from $1,200. | |
| Starting with tax year 2027 | The state rate falls to 2.9%, the end of the schedule enacted in 2023. |
| County rates can change January 1, 2027; the new chart affects 2027 withholding. | |
| The tips, overtime and car-loan deductions lapse unless the 2027 session renews them. | |
| 2028 and later, or conditional | A 2025 law rebuilds local income tax from 2028, allowing cities and towns their own rates of up to 1.2%. |
| From 2030 the state rate can fall another 0.05 point in even-numbered years if revenue tests are met (SEA 451). | |
| The homestead standard deduction phases down through 2029, replaced by a credit. |
Items under 2027 and later do not change the 2026 return. They matter for 2027 withholding, estimated payments and planning. The detail behind each line is in the other Indiana articles.
The 2025 federal law and the Indiana return
Senate Enrolled Act 243, signed March 5, 2026, moved Indiana’s link to the federal code from January 1, 2023 to January 1, 2026. Indiana starts from federal AGI, so the senior deduction never reaches the return, and the tips and overtime deductions are Indiana’s own one-year versions.
That is the reason a change on the federal return, such as the deductions for tips, overtime and people 65 and older, may or may not show up on the Indiana return. The federal side is in The new deductions for tips, overtime and seniors.
What to watch
The 2027 session: whether the tips, overtime and car-loan deductions continue. When something on this page changes, the change is logged on the updates page with its date.
What to bring
- Your 2026 federal and Indiana returns, once filed, to set 2027 withholding and estimated payments against them
- Your last pay stub of 2026 and the first of 2027, to see whether withholding changed
- Any notice from the state about a 2027 rate, credit or filing change
Questions people ask
Does anything here change the Indiana return I file in early 2027?
Only what is listed under the 2026 return. Everything listed under 2027 or later affects withholding, estimated payments and planning, not the return for 2026.
How will I know if this page changes?
Every change is logged on the updates page with its date and the article it affects. State legislatures meet in early 2027 and some act before the filing deadline.
Indiana, after the election
No tax measure on the ballot. The state rate is 2.95% for 2026 and 2.9% for 2027, the last scheduled step.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Sources and where to check
- Indiana Department of Revenue, 2026 Legislative Synopsis (SEA 243, HEA 1210)
- Indiana Department of Revenue, Information Bulletin #128 (June 2026)
- Indiana Department of Revenue, Rates, Fees & Penalties (2.95% for 2026, 2.90% for 2027)
- Indiana Department of Revenue, Departmental Notice #1 (October 1, 2026)
- Indiana Department of Revenue, Extension of Time to File