Indiana · the numbers
Indiana figures at a glance for 2026
Every Indiana number for the 2026 return on one page: the state rate, the county rates, the exemptions, the deductions and credits with their caps, the filing dates, and the short list of what changed from 2025. For anyone who files here, and for anyone checking a preparer’s work.
By Charles Trautman, EA, editor
Need to Know Tax · written from Indiana Department of Revenue sources, November 3, 2026; updated November 12, 2026 after the election · not yet reviewed by an Indiana practitioner
Indiana has few moving parts and almost none of them are indexed. The state rate is 2.95% for 2026, down from 3.0%. The county rate is whatever your county charged on January 1, 2026, between 0.5% and 3.0%. The exemptions are $1,000 a person, $2,500 a dependent child, and $1,000 more at 65, fixed by statute and unchanged for years. The renter’s deduction tops out at $3,000, the homeowner’s property tax deduction at $2,500, the Indiana529 credit at $1,500. New for 2026, and for 2026 only, are deductions for tips, overtime and car loan interest equal to the federal ones. The 2026 IT-40 booklet had not been published when this was written; figures Indiana sets by statute are shown as 2026 figures, and the rest is marked to come.
The core figures
| Item | 2025 | 2026 | Note |
|---|---|---|---|
| State rate, all income | 3.00% | 2.95% | Falls to 2.9% for 2027 |
| County rate | 0.5% to 3.0% | 0.5% to 3.0% | County of residence on January 1; Schedule CT-40; chart effective January 1, 2027 to come |
| Starting point | Federal AGI | Federal AGI | IT-40 line 1 |
| Standard deduction / itemizing | None | None | Exemptions and Schedule 2 deductions instead |
| Exemption, taxpayer and spouse | $1,000 each | $1,000 each | Schedule 3; not indexed |
| Exemption, each dependent | $1,000 | $1,000 | Plus $1,500 for a dependent child under 19, or a student under 24 |
| Additional exemption, dependent child | $1,500 | $1,500 | $3,000 in the first year a child is claimed; $3,000 more for an adopted child |
| Additional exemption, 65 or older | $1,000 | $1,000 | Plus $500 if federal AGI is under $40,000 ($20,000 married filing separately) |
| Additional exemption, blind | $1,000 | $1,000 | |
| Social Security and Railroad Retirement | Not taxed | Not taxed | Deducted in full on Schedule 2 |
| Pensions, IRAs, 401(k)s | Taxed | Taxed | No exclusion; military retirement 100% deductible |
| Tips, overtime, car loan interest | Taxed | Deductible, equal to federal | 2026 only; Information Bulletin #128 |
| Federal $6,000 senior deduction | Not followed | Not followed | Below the line; no Indiana counterpart |
| Bonus depreciation / Section 179 cap | Added back / $25,000 | Added back / $25,000 | Includes section 168(n) property for 2026 |
Everything on this table except the state rate is set in the Indiana Code without an inflation adjustment, which is why the two columns match. The state rate schedule was fixed in 2023 and ends at 2.9% for 2027.
What the exemptions are worth
| Household | Exemptions | State tax saved at 2.95% | With Marion County, 4.97% |
|---|---|---|---|
| Single, under 65 | $1,000 | $30 | $50 |
| Single, 65 or older, AGI $40,000 or more | $2,000 | $59 | $99 |
| Single, 65 or older, AGI under $40,000 | $2,500 | $74 | $124 |
| Married, both under 65 | $2,000 | $59 | $99 |
| Married, both 65 or older, AGI under $40,000 | $5,000 | $148 | $249 |
| Married, two dependent children | $7,000 | $207 | $348 |
| Head of household, one child | $3,500 | $103 | $174 |
A dependent child counts $2,500: the $1,000 dependent exemption plus the $1,500 additional. The exemptions reduce county tax as well as state tax, so the last column is the real saving for an Indianapolis household.
County rates, the large counties
| County | Rate | Combined with 2.95% |
|---|---|---|
| Marion (Indianapolis) | 2.02% | 4.97% |
| Lake | 1.50% | 4.45% |
| Allen (Fort Wayne) | 1.59% | 4.54% |
| Hamilton | 1.10% | 4.05% |
| St. Joseph (South Bend) | 1.75% | 4.70% |
| Vanderburgh (Evansville) | 1.25% | 4.20% |
| Porter, the lowest | 0.50% | 3.45% |
| Randolph, the highest | 3.00% | 5.95% |
The 2026 return uses the rate for the county where you lived on January 1, 2026. All 92 counties are on the Department’s chart; Boone County was the only change on October 1, 2026, to 1.71%, and the chart effective January 1, 2027 is to come.
Deductions on Schedule 2
| Deduction | 2026 figure | Note |
|---|---|---|
| Renter’s deduction | Rent paid, up to $3,000 ($1,500 MFS) | Principal residence in Indiana, subject to property tax |
| Homeowner’s property tax deduction | Tax paid, up to $2,500 ($1,250 MFS) | Principal residence |
| Social Security and Railroad Retirement | 100% of the federally taxable amount | Lines 5 and 6 |
| Military pay, active duty, Guard and reserve | 100% | Line 7 and code 621 |
| Military retirement and survivor benefits | 100% | Code 632 |
| Civil Service annuity | Up to $16,000, less Social Security received | Age 62 or surviving spouse; code 601 |
| Private school and homeschool | $1,000 per dependent child | Line 8; 180 days of instruction |
| Interest on U.S. obligations | 100% | Treasury interest included in federal AGI |
| Disability retirement | Up to $5,200 | Schedule IT-2440; permanently and totally disabled at retirement |
| Tips, overtime, car loan interest | Equal to the federal deductions | 2026 only; placement on the 2026 form to come |
| Unemployment compensation | Partial, by worksheet | Low-income filers; line 10 |
Credits
| Credit | Figure | Refundable? | Where |
|---|---|---|---|
| Indiana earned income credit | 10% of the federal EITC | Yes | Schedule IN-EIC and Schedule 5; federal AGI under the federal limit ($68,675 for 2025; 2026 to come) |
| Indiana529 credit | 20% of contributions, up to $1,500 ($750 MFS) | No; no carryforward | Schedule IN-529 and Schedule 6 |
| Unified Tax Credit for the Elderly | $40 to $140 | Yes | Age 65, federal AGI under $10,000; Schedule 5 or Form SC-40 |
| Adoption credit | 20% of the federal credit, up to $2,500 per child | Excess refundable | Residents only from 2022; prorated for part-year |
| Credit for taxes paid to other states | Lesser of the tax paid, Indiana tax on the same income, or Indiana tax due | No | Schedule 6; other states’ local taxes offset county tax |
| Public school educator expense credit | Up to $100 ($200 joint) | No | Schedule 6 |
| ABLE account contribution credit | 20%, up to $500 | No | Rollovers excluded from 2026 |
| College donation credit (CC-40) | 50%, up to $100 ($200 joint) | No | Gifts to Indiana colleges |
| Child tax credit / child care credit | None | The $2,500 child exemption stands in |
Worked example: a Hamilton County family of four
Married couple, two children under 19, federal AGI $85,200, homeowners who paid $3,000 of property tax and put $4,000 into an Indiana529 account during 2026. No tips, overtime or car loan interest.
| 2026 | |
|---|---|
| Federal AGI | $85,200 |
| Homeowner’s property tax deduction (capped) | −$2,500 |
| Exemptions: 2 × $1,000 + 2 × $2,500 | −$7,000 |
| Indiana taxable income | $75,700 |
| State tax at 2.95% | $2,233 |
| Hamilton County tax at 1.1% | $833 |
| Indiana529 credit, 20% of $4,000 | −$800 |
| Indiana tax | $2,266 |
The 529 credit is an offset credit on Schedule 6 and reduces the combined state and county tax (verify). Without the 529 contribution the bill would be $3,066; the $4,000 saved $800 of tax, a 20% return before the account earned anything. Had the couple put in $7,500 or more, the credit would have been the $1,500 maximum.
Filing and payment dates
| Date | What |
|---|---|
| January 15, 2027 | Fourth 2026 estimated payment, Form ES-40 |
| April 15, 2027 | IT-40 and payment due; Form IT-9 extension; first 2027 estimated payment |
| June 15, 2027 | Second 2027 estimated payment |
| September 15, 2027 | Third 2027 estimated payment |
| November 15, 2027 | Extended due date; a federal extension carries over automatically |
The extension extends filing, not payment. Pay at least 90% of the tax by April 15, 2027 to avoid the 10% late-payment penalty; interest runs on anything paid after that date. Estimated payments are expected when more than $1,000 will be owed after withholding; the safe harbor is 90% of this year’s tax or 100% of last year’s, 110% if last year’s federal AGI was over $150,000. The calendar and forms article has the full list.
Beyond the income tax
| Item | 2026 |
|---|---|
| Sales tax | 7% statewide; no local sales taxes; groceries exempt, prepared food taxed, some counties add a food-and-beverage tax |
| Inheritance tax | Repealed for deaths after December 31, 2012; no estate tax, no gift tax |
| Homestead credit (property tax) | 10% of the homestead bill, up to $300, bills payable 2026 and later, no application |
| Over-65 property tax credit | Up to $150; federal AGI $60,000 or less ($70,000 joint); apply to the county auditor by January 15 |
| Over-65 circuit breaker | Caps the homestead bill’s growth at 2% a year; income limits $60,000 / $70,000; assessed-value cap removed |
| Standard homestead deduction | $40,000 for 2026 assessments, stepping down to $0 by 2030, replaced by a percentage deduction rising from 40% to 66.7% |
| Reciprocal states for wages | Kentucky, Michigan, Ohio, Pennsylvania, Wisconsin; state tax only, county tax still applies |
| Gambling withholding threshold | $2,000, up from $1,200; indexed from 2027 |
What changed from 2025
State rate 2.95%, from 3.0%. Worth $5 per $10,000 of Indiana taxable income.
Conformity date January 1, 2026, from January 1, 2023 (Senate Enrolled Act 243, signed March 5, 2026, retroactive). Above-the-line federal changes from the 2025 federal law now flow into Indiana AGI; below-the-line ones still do not.
Tips, overtime and car loan interest deductible, equal to the federal deductions, for tax year 2026 only. Where they go on the 2026 IT-40 is to come.
No Indiana senior deduction to match the federal $6,000. Nothing changed; the income stays taxed.
One year to report a federal change, from 180 days, for IRS adjustments and amended federal returns after December 31, 2025.
Gambling withholding threshold $2,000, from $1,200.
Adoption credit for residents only, prorated for part-year residents, retroactive to 2022. ABLE credit no longer counts rollovers.
Property tax credits from the 2025 law appeared on bills payable in 2026: the 10% homestead credit, the $150 over-65 credit and the $125 blind or disabled credit.
Local income tax overhaul delayed to 2029; the county rate stays a single county figure for 2026 and 2027.
Not changed: the exemptions, the renter’s and homeowner’s deductions, the 529 credit, the 10% EITC, the treatment of Social Security and retirement income, the due date. The what-is-new article explains each change.
Behind the scenes: why nothing is indexed
The $1,000 exemption, the $1,500 child add-on, the $3,000 renter’s cap and the $2,500 homeowner’s cap were each set by a bill and left there. The Indiana Code contains no cost-of-living adjustment for any of them, so the only numbers that move from year to year are the state rate, which moves because the 2023 budget said so, the county rates, which 92 county councils set, and anything Indiana borrows from the federal return, such as the EITC income limit and, for 2026, the tips and overtime amounts. This makes the Indiana figures easy to remember and slowly less valuable: a $1,000 exemption at 2.95% is $29.50, the same dollars it was worth when it was set and fewer groceries every year.
What to bring
- Last year’s IT-40, with Schedules CT-40, 2, 3 and 5, so each figure can be compared
- Your county of residence on January 1, 2026, and your county of work if different
- Rent paid in 2026 and the landlord’s name and address, or the property tax paid on your home
- Indiana529 contribution statements
- Schedule 1-A from the federal return for the tips, overtime and car loan interest deductions
- Dates of birth for everyone on the return, for the age exemptions
- Form SSA-1099 or RRB-1099, for the Social Security deduction
Questions people ask
What is the Indiana income tax rate for 2026?
2.95% on Indiana adjusted gross income, plus your county’s rate, between 0.5% and 3.0%. Marion County residents pay 4.97% combined. The state rate falls to 2.9% for 2027.
What is the Indiana exemption for 2026?
$1,000 for you, $1,000 for a spouse on a joint return, $1,000 for each dependent plus $1,500 more for each dependent child, $1,000 at 65 or if blind, and $500 more at 65 if federal AGI is under $40,000. None of these is indexed.
Does Indiana have a standard deduction?
No, and no itemized deductions either. Indiana has exemptions and a list of specific deductions on Schedule 2: rent up to $3,000, property tax up to $2,500, Social Security, military pay and a few others.
How much is the Indiana 529 credit?
20% of what you put into an Indiana529 account during the year, up to $1,500 ($750 married filing separately). Anyone who contributes can claim it, including grandparents. It is nonrefundable and does not carry forward.
Is the Indiana EITC still 10% of the federal credit?
Yes. You must have claimed the federal credit, and your income on IT-40 line 1 must be under the federal limit; the 2026 limit will be on the 2026 Schedule IN-EIC.
Are tips and overtime taxed in Indiana for 2026?
Not to the extent of the federal deduction. Indiana created matching deductions for 2026 only, so they reduce state and county tax this year. After 2026 they are taxed again unless the legislature acts.
Two rates, $1,000 exemptions, three caps
Know your county’s rate and the $3,000, $2,500 and $1,500 caps, and most of the Indiana arithmetic is done.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
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Forms and official pages named in this article
- Current-year individual forms: IT-40, Schedule CT-40, Schedules 2, 3, 5 and 6, IN-EIC, IN-529, SC-40, IT-2440, ES-40, IT-9 (2025 versions; 2026 to come)
- IT-40 booklet, 2025 (filing threshold, estimated tax safe harbors, refund timing)
- Departmental Notice #1, county income tax rates effective October 1, 2026
- Income Tax Information Bulletin #128, Deductions for Tips, Overtime, and Vehicle Loan Interest (June 2026)
Sources and where to check
- Indiana Department of Revenue, Rates, Fees & Penalties (2.95% for 2026, 2.90% for 2027; penalties)
- Indiana Department of Revenue, Departmental Notice #1 (October 1, 2026)
- Indiana Department of Revenue, County Tax Rates by Year
- Indiana Department of Revenue, 2026 Legislative Synopsis
- Indiana Department of Revenue, Information Bulletin #128 (June 2026)
- Indiana Department of Revenue, Extension of Time to File
- Indiana Department of Revenue, INfreefile