Quick Answer
Indiana state income tax is a flat 3.23% on all income levels. Someone earning $60,000 pays $1,938 per year in Indiana state tax, which equals about $74.54 per biweekly paycheck. There are no brackets — everyone pays the same 3.23% rate.
Best Answer
Sarah Chen, Payroll Tax Analyst
W-2 employees who need to understand Indiana's simple flat tax system
How much will Indiana take from your paycheck?
Indiana keeps it simple: everyone pays exactly 3.23% of their income in state taxes, regardless of how much they earn. Unlike most states with graduated brackets, Indiana uses a flat tax rate that makes calculating your withholding straightforward.
Indiana flat tax examples
Here's what Indiana state tax costs at different income levels:
Example: $75,000 salary calculation
Calculating Indiana tax is simple multiplication:
How Indiana withholding works
Your employer withholds Indiana tax based on your Form WH-4 (Indiana's version of the W-4). According to Indiana Department of Revenue guidelines, withholding is calculated as a straight percentage of your gross pay after pre-tax deductions.
Key withholding factors:
Indiana vs. federal tax interaction
Indiana largely conforms to federal tax rules but with key differences:
Local income taxes in Indiana
Some Indiana counties impose additional local income taxes ranging from 0.50% to 3.38%. This is collected with your state withholding but varies by county. For example:
Your total state + local rate could range from 3.23% to 6.61% depending on where you live.
What you should do
Indiana's flat tax makes planning easy, but check if your county has local income tax. Update your Form WH-4 if you:
Use our paycheck calculator to see your exact take-home pay including both state and any local Indiana taxes.
Key takeaway: Indiana charges a flat 3.23% income tax on all income levels, making it one of the simplest state tax systems. A $75,000 earner pays about $93 per biweekly paycheck, plus any applicable local taxes.
*Sources: [Indiana Department of Revenue](https://www.in.gov/dor/), [IRS Publication 15-T](https://www.irs.gov/pub/irs-pdf/p15t.pdf)*
Key Takeaway: Indiana charges a flat 3.23% income tax on all income levels, making it one of the simplest state tax systems in the country.
Indiana state tax compared to neighboring states
| State | Tax Structure | Rate | Example: $70,000 Income |
|---|---|---|---|
| Indiana | Flat | 3.23% | $2,261 |
| Illinois | Flat | 4.95% | $3,465 |
| Ohio | Progressive | 0% - 3.99% | $2,492 |
| Kentucky | Flat | 4.00% | $2,800 |
| Michigan | Flat | 4.25% | $2,975 |
More Perspectives
Sarah Chen, Payroll Tax Analyst
People who recently moved to Indiana from states with different tax structures
Moving to Indiana: What to expect
Indiana's flat 3.23% tax is refreshingly simple compared to most states. If you're moving from a progressive tax state like California or New York, you'll likely save money. If you're coming from a no-tax state like Tennessee or Wyoming, you'll start paying state income tax.
Tax impact by previous state
Moving from high-tax states (savings):
Moving from no-tax states (new cost):
Part-year resident filing
When you move to Indiana mid-year, you'll file Form IT-40PNR (part-year nonresident return) reporting:
Don't forget local taxes
Many Indiana counties have local income taxes that can nearly double your total rate. Research your specific county's rate — it could add 0.50% to 3.38% on top of the 3.23% state rate.
Key takeaway: Indiana's flat 3.23% rate is simple and often lower than progressive tax states, but don't forget to research local county taxes that can significantly increase your total rate.
Key Takeaway: Indiana's flat 3.23% rate is often lower than progressive tax states, but county local taxes can add 0.50% to 3.38% more.
Sarah Chen, Payroll Tax Analyst
Remote workers who live in Indiana but work for companies in other states
Indiana taxes for remote workers
As an Indiana resident working remotely, you owe Indiana income tax on all your income at the flat 3.23% rate, regardless of where your employer is located. Indiana taxes residents on their worldwide income.
Withholding complications
If your employer is in another state, they might:
1. Not withhold Indiana tax at all (common with employers in no-tax states)
2. Withhold their state's tax instead (you'll get credit but timing issues arise)
3. Withhold both states (requires you to claim refund from non-resident state)
Example: Working for a California company
If you live in Indiana but work for a California company earning $85,000:
Estimated payment strategy
To avoid owing Indiana tax in April:
1. Request Indiana withholding: Give your employer Form WH-4
2. Make quarterly estimated payments: Pay Indiana directly using Form ES-40
3. Increase federal withholding: Easier than coordinating with out-of-state employer
Increasing federal withholding by the amount of your Indiana tax liability often works best — you'll get the excess refunded federally and can pay Indiana with it.
Key takeaway: Indiana residents working remotely owe the flat 3.23% rate on all income and often need to handle withholding through estimated payments when employers are out-of-state.
Key Takeaway: Indiana residents working remotely owe the flat 3.23% rate on all income and often need to make estimated payments when employers don't withhold Indiana tax.
Sources
- Indiana Department of Revenue — Official Indiana tax rates and withholding guidance
- IRS Publication 15-T — Federal Income Tax Withholding Methods
Reviewed by Sarah Chen, Payroll Tax Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.