Indiana tax deductions and write-offs (2026)

No. Indiana fully exempts military retired pay from state income tax; the exemption was phased in and reached 100% in tax year 2022. Other retirement income: Private pensions and 401(k)/IRA withdrawals are taxed at Indiana's flat rate (plus county tax) with no general retirement exclusion.

Yes. Private pensions and 401(k)/IRA withdrawals are taxed at Indiana's flat rate (plus county tax) with no general retirement exclusion. Indiana DOR still publishes $16,000.

No. Indiana does not tax Social Security or Railroad Retirement Board benefits; any amount taxed federally is deducted on the Indiana return.

Yes: Indiana offers the Indiana Earned Income Credit, 10% of the federal EITC (refundable). Must claim the federal EITC. Calculated under the federal tax code as of Jan 1, 2023; later federal changes are not adopted automatically. Claim on Schedule IN-EIC.

Only instead of income tax: itemizers in Indiana pick sales tax (7% state rate, about 7% with local taxes) or state income tax, whichever is bigger. A flat 7% statewide with no local general sales taxes; some localities add a 1–2% food-and-beverage tax on prepared food.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Indiana adds its own break: Deduct up to $2,500 of property taxes on your Indiana home; renters can deduct up to $3,000 of rent.

Yes: Indiana offers the Renter's Deduction. Deduction of rent paid on your Indiana principal residence, up to $3,000, claimed on Schedule 2 of Form IT-40. Maximum $3,000 per return ($1,500 if married filing separately); no income or age limit; the rental must be subject to Indiana property tax.

Partly: Indiana's vehicle excise tax is based on your vehicle's value, so it's deductible as personal property tax if you itemize. Excise tax is set by MSRP price class and vehicle age, from $12 up to $532 per year for new vehicles over $42,500.

Indiana has a flat state rate of 2.95% for 2026 plus county income taxes, and renters can deduct up to $3,000 of rent.

Yes on your Indiana return: 20% credit up to $1,500 per return (on $7,500 contributed); $750 MFS. Only contributions to the state's own plan count. Nonrefundable; any contributor qualifies; contributions by April 15 may count for prior year; credit recaptured on nonqualified withdrawals.

No: Indiana doesn't offer a state child tax credit. No child tax credit or care credit. Dependent exemption of $1,000, plus an extra $1,500 per dependent child under 19 (under 24 if a full-time student), or $3,000 in the first year the exemption is claimed. A 2025 Senate-passed $500 newborn credit was not enacted. Indiana does have an earned income credit: 10% of the federal EITC.

Yes, as a business expense: Indiana charges $95 online ($75 + $20 enhanced access) / $100 paper to form an LLC; ongoing: $32 online / $50 paper Business Entity Report, every 2 years. Due by end of the formation anniversary month in each biennial year.