Indiana State Taxes

Indiana Income Tax

For 2026, the tax rate changes to 2.95%. It will continue to decrease if budget conditions are met, until it reaches 2.9% by 2029.

All 92 of Indiana’s counties impose a county income tax on residents and non-residents with a place of business or employment in the county. Indiana counties may also impose a local income tax rate of no more than 0.2% for emergency medical services. This additional tax can only be in effect for a maximum of 25 years.

Who Must File?

You may need to file an Indiana income tax return if you lived in the state and received income, or you had income from an Indiana source but resided elsewhere.

Full-year residents generally should file (Form IT-40) if they have an income of $1,000 or more, or if the total of all income before deductions were more than the total exemptions claimed.

Other Residents

Part-year residents  and non-residents must file a return (IT-40PNR) if any of the following are true:

• While living in Indiana you received income from any source
• While living outside of the state, you received income from an Indiana source

Full-year residents of Michigan, Kentucky, Ohio, Wisconsin, or Pennsylvania who receive wages, salaries, tips, or commissions from an Indiana source must file IT-40RNR.

Indiana Sales Tax

Since April 1, 2008, Indiana’s state sales tax rate has been 7%. Counties and cities do not collect local sales tax. Although its state sales tax rate is the second-highest in the country, it ranks near the middle (24^th) when compared to other overall sales tax rates.

Indiana Property Taxes

Indiana levies property taxes at the county level. Property taxes are paid in two installments annually – one on May 10 and the other on November 15. The amount you owe is determined by the assessed value of your property (minus any deductions) multiplied by your local property tax rate.

The median property tax in Indiana is $1,415 annually. Hamilton County has the highest property tax at an average of $3,119. The lowest amount is $560 in Pulaski County.

Indiana Property Tax

Highest	$3119
Median	$1415
Lowest	$560

Yearly Cost Per Resident

Indiana Tax Holidays

There are no tax holidays scheduled in Indiana at this time.

Indiana Tax Relief

Dealing with past-due Indiana taxes can become more difficult the longer your balance goes unresolved. Penalties and interest may continue to add up, and the Indiana Department of Revenue (DOR) may take steps to collect what you owe. Whether your tax problem stems from missed filings, financial difficulties, or unpaid business taxes, addressing your balance sooner may help prevent the situation from progressing to more serious collection activity.

If you aren’t able to pay your Indiana tax bill in full, you may have options for resolving your balance. Depending on your circumstances and eligibility, you may be able to establish a payment plan, request penalty abatement, or pursue an Offer in Compromise. Taking steps to resolve your account may also help you avoid or address enforcement actions such as tax liens, wage garnishments, and bank levies.

Knowing how Indiana handles delinquent taxes and what relief options are available can help you make a more informed decision about your next steps. By addressing your outstanding tax obligations and finding a suitable resolution, you can work toward bringing your Indiana tax account back into good standing.

Common Indiana State Tax Problems

How Indiana Collects Tax Debt

If you have an unpaid Indiana tax balance, the state will send you a Notice of Proposed Assessment (NOPA) letter. This will outline what you owe, including any penalty and interest fees. It will also give you a deadline to take action. Failure to meet this deadline will result in the state issuing a Demand for Payment.

If you do not pay your outstanding balance or respond to the Demand for Payment, Indiana will issue a Tax Warrant for immediate collection action. This may appear on your credit report or a title search and becomes a lien on your property across the state.

Additional collection actions may include wage garnishment, bank levies, and seizure of your real and personal property.

Penalties and interest will continue to accrue until your balance is paid in full. Addressing your tax debt as early as possible can help you avoid additional costs and more serious collection actions.

Notice of Proposed Assessment

Demand for Payment

Tax Warrant for Collections of Tax

Indiana State Tax Relief Options

Indiana offers a few relief options, including:

• Payment Plans – Indiana offers payment plans for taxpayers who owe more than $100. Plans range from 3 months to 36 months, depending on the amount owed.
• Penalty Abatement – Indiana considers penalty abatement requests made online through INTIME or by filing Form 53054. There must be reasonable cause as to why the tax payment was late.
• Tax Amnesty – Indiana has offered limited windows where taxpayers can have their penalties waived. The program was available in 2005 and 2015. There is a Tax Amnesty 2026 program that was open between July 15 and September 9, 2026, allowing taxpayers with penalties from tax years 2023 and earlier to get relief.
• Offer in Compromise – Taxpayers facing economic hardship or cases where the state does not believe it can collect the tax balance in full (doubt as to collectability) may be eligible to submit an Offer in Compromise. This allows the taxpayer to settle their tax balance for less than they owe.

If you’re experiencing financial hardship and can’t pay your Indiana income tax bill, contact the Department of Revenue as soon as possible to avoid collection actions.

When to Seek Tax Relief Help

If you’re experiencing any of the following, it may be time to explore your tax relief options:

The sooner you address your tax debt, the more options you may have available to resolve your balance and minimize additional collection actions.

Indiana Tax Relief FAQs

How do I set up an Indiana payment plan?

If you can’t pay your Indiana income taxes in full by the due date, and you owe more than $100, you can apply for a payment plan online through INTIME or by contacting customer service at (317) 232-2240.

If applying online, log in to INTIME and go to “All Actions” under the “Payment Plan” section. Check the box at the bottom of “Is a payment plan right for me?” to continue with the application. Next, select your preferred payment plan option (monthly or bi-weekly payments), as well as the number of payments and payment amount.

Once complete, the system will generate a payment plan schedule agreement, and you will need to provide your bank information for the automatic payments. Review the summary and terms. If you agree, click “Submit” to continue. You should receive a confirmation number. Print or save this page for your records.

The amount of time you’ll have to pay your balance depends on how much you owe:

• Balances between $100 and $1,000 – up to 12 months
• Balances between $1,001 and $5,000 – up to 24 months
• Balances over $5,000 – up to 36 months

It’s important to note that a 10% penalty will be incurred and interest will continue to accrue until the tax debt is paid in full.

What happens if I ignore Indiana tax notices?

If you ignore Indiana tax notices, the state will escalate its collection actions by placing a lien (Tax Warrant) on your property. It may also garnish your wages, seize your bank accounts, and other assets.

Can Indiana garnish my wages for unpaid taxes?

Yes, Indiana can garnish up to 25 % of your disposable income for unpaid state taxes. If your weekly take-home pay drops below $217.50, the state cannot garnish your paycheck.

Can Indiana levy my bank account?

Yes. The state can levy your bank accounts and seize the money to pay your back taxes. You should receive a notice 10 days before they issue the levy to your bank.

How long does Indiana have to collect back taxes?

Indiana generally has up to 10 years from the date the tax was assessed to collect the debt. This applies to tax liens and other collection methods.

Indiana Tax Resources

If you need assistance preparing your Indiana state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.

You can also visit the Indiana Department of Revenue website for additional resources.

• Set Up a Payment Plan
• Check the Status of Your Refund
• Download Tax Forms
• Taxpayer Assistance: 800-457-8283