The facts on Indiana’s Tax Climate

  • 3.4%
    individual income tax
    flat rate
  • 8.5%
    corporate income tax
    flat rate
  • 7.0%
    sales tax
  • $1,124
    property tax
    collections per capita

Indiana’s Individual Income Tax System                                                                                           
Indiana’s personal income tax system consists of a flat 3.4% rate on federal adjusted gross income (AGI). That rate ranks 42nd highest among states levying an individual income tax. Indiana’s 2010 state-level individual income tax collections were $597 per person, which ranked 32nd highest nationally.

50-State Table of Individual Income Tax Rates

50-State Table of State Individual Income Tax Collections

50-State Table of State and Local Individual Income Tax Collections Per Capita

Tax Freedom Day Arrives on April 14 in Indiana

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2012, Indiana taxpayers work until April 14 (ranked 26th nationally) to pay their total tax bill. The Tax Freedom Days of neighboring states are: Kentucky, April 9 (ranked 37th nationally); Illinois, April 23 (ranked 5th nationally); Michigan, April 14 (ranked 26th nationally); and Ohio, April 12 (ranked 28th nationally).

Indiana’s State and Local Tax Burden Below National Average

Indiana’s 2009 state and local tax burden of 9.5% of income is below the national average of 9.8%. Indiana’s tax burden has increased overall from 8.5% (44th nationally) in 1977 to 9.5% (25th nationally) in 2009. Hoosiers pay $3,396 per capita in state and local taxes.
Indiana’s State-Local Tax Burden, 1977-present
Other States’ State/Local Tax Burdens
Map of U.S. Showing all State’s Burdens and Ranks
Historical Chart Comparing All States’ State/Local Tax Burdens from 1977 to 2009

Indiana’s 2013 Business Tax Climate Index Ranks 11th

Indiana ranks 11th in the Tax Foundation’s State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Michigan (12th), Illinois (29th), Kentucky (24th), and Ohio (39th).

50-State Comparison of Business Tax Climates (data only)
2013 State Business Tax Climate Index (full study)