Does Indiana tax Social Security?

No. Indiana fully exempts Social Security benefits from state income tax. Any portion that is taxable on your federal return is subtracted on the Indiana return, so it is not taxed by the state or your county.

Is military retirement pay taxed in Indiana?

No. Indiana phased in a full deduction for military retirement and survivor benefits, fully effective from the 2022 tax year. Qualifying military pension income is completely exempt from Indiana income tax.

How are 401(k) and IRA withdrawals taxed in Indiana?

They are taxed as ordinary income at Indiana's flat 3.05% state rate (2024) plus your county's local income tax. Indiana has no general retirement-income exclusion for these distributions, unlike Social Security or military pay.

What is Indiana's county income tax?

Every Indiana county levies a local income tax that applies to the same income as the state tax, including taxable retirement income. Rates vary by county, typically from about 0.5% to 3%, so enter your county's rate for an accurate estimate.

Are pensions other than military exempt in Indiana?

Generally no. Federal civil-service, state government, and private pensions are taxable in Indiana at the flat state rate plus county tax. Only Social Security and qualifying military retirement pay receive a full exemption.

Indiana Retirement Income Tax Calculator

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Indiana is fairly retiree-friendly: Social Security and military retirement pay escape state tax entirely, while most other retirement income is taxed at a single flat rate plus a county tax. This calculator separates the exempt streams from the taxable ones so you can see your real Indiana bill.

How it works

Indiana applies a flat state income tax rate (3.05 percent for 2024, scheduled to 3.00 percent for 2025). On top of that, every county levies a local income tax that varies from roughly 0.5 to 3 percent. The state and county tax the same taxable income.

Indiana removes certain retirement streams before applying the rate:

Social Security ............ exempt
Military retirement pay .... exempt (2022 tax year onward)
Pensions / IRA / 401(k) .... taxable as ordinary income

After exemptions, a personal exemption is subtracted, then the flat state rate and your county rate apply to what remains.

Example

A single retiree with 24,000 dollars of Social Security, an 18,000 dollar private pension, and 20,000 dollars of 401(k) withdrawals has 38,000 dollars of Indiana-taxable income (Social Security is removed). After a 1,000 dollar exemption, 37,000 dollars is taxed at 3.05 percent (about 1,129 dollars state) plus a 1.6 percent county tax (about 592 dollars), for roughly 1,721 dollars.

Notes

This is a simplified model. It does not handle the full Indiana add-back and deduction schedule, renter or homeowner property-tax interactions, or partial military survivor rules. Use it for planning and confirm at in.gov/dor.