October 17, 2018

Indiana: Who Pays? 6th Edition


INDIANA

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INDIANA STATE AND LOCAL TAXES

Taxes as Share of Family Income

Top 20%
Income Group Lowest
20%
Second
20%
Middle
20%
Fourth
20%
Next
15%
Next
4%
Top
1%
Income Range Less than
$18,800
$18,800 to
$36,100
$36,100 to
$58,000
$58,000 to
$92,300
$92,300 to
$183,500
$183,500 to
$436,100
over
$436,100
Average Income $11,400 $27,800 $46,700 $73,700 $125,500 $267,000 $1,009,500
Sales & Excise Taxes 7.1% 6.0% 4.8% 4.1% 3.0% 1.9% 1.0%
General Sales – Individuals 4.0% 3.6% 3.0% 2.6% 1.9% 1.2% 0.6%
Other Sales & Excise – Ind. 1.5% 1.1% 0.8% 0.6% 0.4% 0.2% 0.1%
Sales & Excise on Business 1.6% 1.3% 1.1% 0.9% 0.7% 0.4% 0.3%
Property Taxes 3.4% 2.2% 2.9% 1.8% 1.6% 1.9% 1.8%
Home, Rent, Car – Ind. 3.1% 2.0% 2.6% 1.5% 1.3% 1.4% 0.7%
Other Property Taxes 0.3% 0.2% 0.3% 0.3% 0.3% 0.6% 1.1%
Income Taxes 2.3% 3.1% 3.5% 3.7% 3.8% 3.7% 3.9%
Personal Income Tax 2.2% 3.1% 3.4% 3.7% 3.7% 3.7% 3.8%
Corporate Income Tax 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1%
TOTAL TAXES 12.8% 11.3% 11.1% 9.6% 8.4% 7.5% 6.8%

Individual figures may not sum to totals due to rounding. Download the table

TAX FEATURES DRIVING THE DATA in Indiana

Progressive Features

Regressive Features

  • Provides comparatively large standard deduction
  • State sales tax base excludes groceries
  • Requires the use of combined reporting for the corporate income tax
  • Provides a refundable Earned Income Tax Credit (EITC)
  • Provides a refundable dependent care tax credit
  • Personal income tax uses a flat rate
  • Comparatively low-income tax exemptions
  • EITC is not coupled to enhancements in the federal credit for families with 3+ kids and married filers
  • Fails to provide a property tax “circuit breaker” credit for low-income taxpayers
  • Fails to use combined reporting as part of its corporate income tax
  • Does not levy a tax on estates or inheritances

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, which measures the impact of each state’s tax system on income inequality, Indiana has the 12th most unfair state and local tax system in the country. Incomes are more unequal in Indiana after state and local taxes are collected than before. (See Appendix B for state-by-state rankings and the methodology section for additional detail on the index.)

Note: Figures show permanent law in Indiana enacted through September 10, 2018, at 2015 income levels. Corporate income and financial institutions tax rates reflect tax year 2018 levels. Top figure represents total state and local taxes as a share of non-elderly income. The sixth edition of Who Pays does not include the impact of the federal deduction for state and local taxes (SALT) because policy changes in the 2017 federal Tax Cuts and Jobs Act temporarily limited the extent to which the SALT deduction functions as a generalized offset of state and local taxes.