Retiring in Indiana: how your income is taxed
Indiana is less tax-friendly for retirees. On a typical retirement income it ranks #50 of 51 for the lowest state income tax.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
The rules in Indiana
- Social Security: Indiana does not tax Social Security; taxable federal benefits are deducted on the state return.
- Pensions: Private pensions are taxed at Indiana's flat state rate plus county income tax. Federal civil service annuities get a separate deduction at 62 and older, reduced by any Social Security received.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals are fully taxable, with state plus county tax.
- At 65 and older: Each filer 65 or older gets an extra $1,000 exemption, plus $500 more when federal AGI is under $40,000.
Calculate your Indiana retirement taxes
State income tax in Indiana: $1,748 a year
In Indiana, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Indiana estimate includes county income tax at an approximate statewide-average rate. Your actual county rate may differ; other local income taxes are not modeled.
In Indiana you'd pay about $1,748 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $63,916 (8.7% total).
Indiana ranks #50 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
How this retirement estimate is calculated
These rows use your current household, not a second fixed example. Income counted by the state is shown before its regular deductions; an exclusion is not a tax credit. This remains a planning estimate, not a completed return.
| Calculation step | Annual amount |
|---|---|
| Social Security taxable federally | $22,350 |
| Social Security counted by this state | $0 |
| Pension / retirement withdrawals excluded by state rules | $0 |
| Pension / retirement withdrawals still counted | $40,000 |
| Other ordinary income counted | $0 |
| Additional state age / senior income subtractions | $1,000 |
| Income before regular state deductions and exemptions | $39,000 |
| Taxable base after regular state deductions and exemptions | $38,000 |
| State tax before additional retirement credits | $1,121 |
| Additional modeled retirement tax credits | $0 |
| State tax after those credits | $1,121 |
| Approximate county income tax | $627 |
| Modeled state and included county tax | $1,748 |
Private pension and traditional withdrawals remain taxable; federally taxable Social Security is removed. Regular exemptions, including modeled age-based exemptions, reduce the base. The county component uses an approximate statewide-average rate, not the actual January 1 residence county. Indiana DOR senior-tax guidance and Notice 1 county-rate instructions explain the separate checks.
What retirees pay in Indiana
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 traditional IRA withdrawals | $437 | $322 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $1,748 | $1,656 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $4,508 | $4,416 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. State estimates apply Indiana's main exclusions and may differ for income-tested credits.
Lower-tax states for the age-67 example
The amounts below use the fixed example above. Comparison links carry the last valid household entered in the calculator, including each spouse's income and age; the destination recalculates that household. Finish correcting invalid entries before using a comparison.
Moving to Indiana in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Indiana come from (IRS migration data, 2022–2023).
- Illinois to Indiana
- Florida to Indiana
- Kentucky to Indiana
- Ohio to Indiana
- Michigan to Indiana
- Texas to Indiana
Frequently asked questions
Does Indiana tax Social Security?
Not taxed. Indiana does not tax Social Security; taxable federal benefits are deducted on the state return.
Does Indiana tax pensions?
Taxed. Private pensions are taxed at Indiana's flat state rate plus county income tax. Federal civil service annuities get a separate deduction at 62 and older, reduced by any Social Security received.
Does Indiana tax 401(k) and IRA withdrawals?
Taxed. 401(k) and IRA withdrawals are fully taxable, with state plus county tax.
Is Indiana a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals, Indiana charges about $1,748 in state income tax, ranking #50 of 51 (lowest tax first).
Related
Sources: in.gov, in.gov (2), in.gov (3). Rules reviewed .