Research Areas
Indiana
The Facts on Indiana’s Tax Climate
Here are some basic facts on Indiana’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 5 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 2011, Indiana taxpayers work until April 5 (ranked 32nd nationally) to pay their total tax bill, 7 days before national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Michigan, April 7 (ranked 26th nationally); Illinois, April 15 (ranked 9th nationally); Kentucky, April 2 (ranked 42nd nationally); and Ohio, April 6 (ranked 28th nationally).
Full study of Tax Freedom Day, nationwide and in each state
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 2012 Business Tax Climate 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 (18h), Illinois (28th), Kentucky (22nd), and Ohio (39th).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)
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 41st highest among states levying an individual income tax. Indiana's 2008 state-level individual income tax collections were $760 per person, which ranked 33rd 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
Indiana's Corporate Income Tax System Indiana's corporate tax structure consists of a flat rate of 8.5% on all corporate income. Among states levying corporate income taxes, Indiana's top rate ranks 11th highest nationally. In 2008, state-level corporate tax collections (excluding local taxes) were $143 per capita, ranking the state 22nd highest among states that tax corporate income.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita
Indiana Sales and Excise Taxes
Indiana levies a 7% general sales or use tax on consumers, which exceeds the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,241 per person, which ranks 33rd highest nationally. Indiana's gasoline tax stands at 34.1 cents per gallon, which ranks 16th highest nationally. Additionally, the state's general sales tax is applied to gasoline purchases. Indiana's cigarette tax stands at 99.5 cents per pack of twenty, which ranks 28th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1923 and the cigarette tax in 1947.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
Indiana Property Taxes: Comparatively High
Indiana is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Indiana's localities collected $1,337.60 per capita in property taxes in fiscal year 2006, the latest year for which the Census Bureau has published state-by-state data. At the state level, Indiana collected $1.21 per person during FY 2006, making its combined state/local property taxes $1,338.80, which ranks14th highest nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Indiana is a Beneficiary State
Compared to the average state, Indiana taxpayers receive about the same federal funding per dollar of federal taxes paid. For every dollar of federal tax collected in 2005, Indiana citizens received approximately $1.05 in federal spending. This ranks the state 30th highest nationally and represents a significant rise from 1995 when Indiana received $0.84 in federal spending per dollar of taxes and ranked at 42nd nationally. Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were: Michigan ($0.92), Illinois ($0.75), Kentucky ($1.51), and Ohio ($1.05).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
