Indianapolis, IN Taxes 2025
Complete local tax guide and OBBBA calculator
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Indianapolis Tax Overview 2025
Low cost of living with local income tax. Affordable housing market.
Local Income Tax
2.02%
City/county rate
Sales Tax
7.00%
State + local
Property Tax
0.87%
Effective rate
Median Home
$185,000
Home value
State Tax Information
Indianapolis is located in Indiana (3.15% state income tax)
💼 Indianapolis Local Income Tax
Indianapolis imposes a local income tax of 2.02% on residents. This is in addition to any state income tax you may owe to Indiana.
Local income taxes are common in Ohio, Pennsylvania, and a few other states. They're typically withheld from your paycheck if you work in Indianapolis, regardless of where you live.
Total Income Tax Burden in Indianapolis
🛒 Indianapolis Sales Tax 2025
The combined sales tax rate in Indianapolis is 7.00%. This includes both the Indiana sales tax and any local sales taxes.
Sales tax applies to most retail purchases in Indianapolis. Some items like groceries, prescription medications, and clothing may be exempt or taxed at reduced rates depending on Indiana law.
Sales Tax Breakdown
Sales Tax Examples
| Purchase Amount | Sales Tax | Total |
|---|---|---|
| $50 | $3.50 | $53.50 |
| $100 | $7.00 | $107.00 |
| $500 | $35.00 | $535.00 |
| $1,000 | $70.00 | $1,070.00 |
🏠 Indianapolis Property Tax 2025
The average effective property tax rate in Indianapolis is 0.87%. Based on the median home value of $185,000, the typical homeowner pays approximately $1,610 per year in property taxes.
Property taxes fund local services including schools, police, fire departments, roads, and parks. Rates vary by specific location within Indianapolis based on school district and other taxing authorities.
Estimated Annual Property Tax in Indianapolis
| Home Value | Annual Tax | Monthly | SALT Deductible? |
|---|---|---|---|
| $200,000 | $1,740 | $145 | ✓ Yes |
| $300,000 | $2,610 | $218 | ✓ Yes |
| $400,000 | $3,480 | $290 | ✓ Yes |
| $500,000 | $4,350 | $363 | ✓ Yes |
| $750,000 | $6,525 | $544 | ✓ Yes |
| $1,000,000 | $8,700 | $725 | ✓ Yes |
💡 SALT Tip: Under the OBBBA, you can deduct up to $40,000 in state and local taxes (SALT) on your federal return. This includes property taxes, state income taxes, and local income taxes.
💰 Indianapolis Cost of Living
Housing Costs
Tax Summary
OBBBA Tax Benefits for Indianapolis Residents
Local income tax makes federal OBBBA deductions more valuable.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced several federal tax deductions that can significantly reduce your tax burden as a Indianapolis resident.
Available OBBBA Deductions:
Calculate Your Indianapolis Tax Savings
Use our free OBBBA calculator to see exactly how much you could save on your 2025 federal taxes as a Indianapolis resident.
Calculate My SavingsFrequently Asked Questions
What is the sales tax in Indianapolis?
The combined sales tax rate in Indianapolis is 7.00%. This includes both state and local sales taxes.
Does Indianapolis have a local income tax?
Indianapolis has a local income tax of 2.02%. This is in addition to any state and federal income taxes.
What is the property tax rate in Indianapolis?
The average effective property tax rate in Indianapolis is 0.87%. On a home worth $185,000, you'd pay approximately $1,610 per year.
How do OBBBA deductions benefit Indianapolis residents?
Local income tax makes federal OBBBA deductions more valuable. You can use our free calculator to estimate your total savings from tips, overtime, auto loan interest, SALT, and senior bonus deductions.