Personal Finance
in Indiana
Everything Indiana residents need to know — state taxes, best savings rates, housing market, retirement rules, and money-saving strategies specific to IN.
Indiana has one of the lowest flat income tax rates in the country at 2.95% for 2026 (reduced from 3.0% in 2025). However, Indiana also imposes county income taxes that range from 0.5% to 2.86% depending on where you live — so your total state+local income tax rate is typically 3.5%–5.8%.
HYSA interest is taxed as ordinary income at both federal and Indiana state rates. Your effective after-tax HYSA yield in Indiana is approximately ~3.48% on a 4.50% APY account.
| Account Type | Best APY | After Tax (IN) | Best For |
|---|---|---|---|
| High-Yield Savings (HYSA) | 4.50% | ~3.48% | Emergency fund, short-term savings |
| 6-Month CD | 4.80% | ~3.70% | Money not needed for 6 months |
| I Bonds | Variable | State tax exempt | Inflation hedge; 1-year lockup |
| Roth IRA | ~7% long-term | 100% tax-free | Retirement savings |
Indiana offers very affordable housing. Median home prices range from $200,000–$280,000 in the Indianapolis metro area, with smaller cities like Fort Wayne, Evansville, and South Bend offering even lower prices ($150,000–$220,000). Indiana's housing costs are 20–30% below the national average.
Down payment assistance: Indiana Housing and Community Development Authority (IHCDA) offers the First Place and Next Home programs with up to 6% of the purchase price in down payment assistance for eligible buyers.
Indiana does not tax Social Security benefits. Military retirement pay received after age 62 is exempt. Other pension and retirement income is taxed at the flat 2.95% state rate plus applicable county taxes. Indiana has no estate or inheritance tax.