Indiana's statewide sales tax is 7 percent

Indiana charges a 7 percent sales tax on most retail purchases. This is the base rate that applies across the entire state. However, some counties and cities add their own local sales tax on top of the state rate, so your total tax can be higher depending on where you shop.

The 7 percent state rate has been in place since 2008. It applies to tangible goods — things you can touch and take home — like clothing, electronics, furniture, and groceries at the checkout. Services like haircuts, car repairs, and plumbing are generally not taxed in Indiana.

When you see a price tag in an Indiana store, that price does not include sales tax. The tax is added at the register, so your final bill will be higher than the sticker price.

Key Takeaways

  • Indiana's state sales tax rate is 7 percent on most retail goods.
  • Many counties and cities add local sales tax ranging from 0.25 to 2.5 percent, making your total tax rate between 7 and 9.5 percent depending on location.
  • Groceries, prescription medications, and medical devices are exempt from Indiana sales tax.
  • Services like haircuts, repairs, and professional labor are not subject to sales tax in Indiana.

Local sales taxes that stack on top of the state rate

Many Indiana counties and cities charge an additional local sales tax. This local tax is added to the 7 percent state rate, so your total sales tax can range from 7 percent to as high as 9.5 percent depending on where you are shopping.

Marion County (which includes Indianapolis) charges an additional 1.25 percent local tax, bringing the total to 8.25 percent. Lake County charges 1.5 percent, making the total 8.5 percent. Other counties vary — some add as little as 0.25 percent, while others add up to 2.5 percent. The local rate depends on the specific county or city, and some areas have no local tax at all, meaning you pay only the 7 percent state rate.

You can find your exact local rate by entering your zip code on the Indiana Department of Revenue website or by asking a cashier at a store in your area. The rate can differ between neighboring towns, so it matters where you make your purchase.

What is and is not taxed in Indiana

Groceries are not taxed in Indiana. This includes food you buy at a supermarket to cook at home — bread, milk, vegetables, meat, and canned goods. However, prepared food and restaurant meals are taxed at the full rate.

Prescription medications and over-the-counter drugs are also exempt from sales tax. Medical devices like hearing aids, prosthetics, and diabetic supplies are not taxed either. Clothing and shoes are taxed at the regular rate.

Services are generally not subject to sales tax. A haircut, car repair, plumbing work, or dental cleaning will not have sales tax added. However, if you buy a product as part of that service — like hair dye at a salon or parts for a car repair — the product itself may be taxed depending on how it is billed.

How sales tax is calculated at checkout

Sales tax is calculated on the subtotal of your purchase before any discounts or coupons are applied. If you buy an item for $20 and the sales tax rate is 7 percent, the tax is $1.40, making your total $21.40.

If you have a coupon that reduces the price to $15, the sales tax is calculated on the $15 amount, not the original $20. This means coupons lower both the price and the tax you owe.

When you buy multiple items, the sales tax is applied to the entire taxable subtotal. If some items are exempt (like groceries) and some are taxable (like household supplies), the tax is only added to the taxable items. The cashier's register automatically separates these, so you do not have to track it yourself.

Sales tax on online and mail orders

Online retailers are required to charge Indiana sales tax if they have a physical presence in the state or meet certain sales thresholds. Large retailers like Amazon, Walmart, and Target charge Indiana sales tax on orders shipped to Indiana addresses. Smaller online sellers may not charge sales tax, but Indiana residents are technically responsible for reporting and paying "use tax" on those purchases when filing their state income tax — though this is rarely enforced for individual shoppers.

When you order online and the retailer charges sales tax, it is added to your order total before shipping. The tax rate used is based on your delivery address zip code, so you pay the local rate for your area even if the company is located elsewhere.

Sales tax on vehicles and special purchases

Vehicle purchases are subject to sales tax in Indiana, but the calculation is different from regular retail. The tax is based on the purchase price of the vehicle, and you typically pay it when you register the vehicle with the Bureau of Motor Vehicles rather than at the dealership. The rate is the same 7 percent state rate plus any applicable local tax.

Used vehicles are also taxed. If you buy a used car from a private seller, you still owe sales tax when you register it in Indiana. If you trade in a vehicle, the sales tax is calculated on the net price (the new vehicle price minus the trade-in value), not the full purchase price.

Gasoline is subject to sales tax in addition to the state and federal fuel excise taxes. When you fill up at a gas station, the price you see already includes sales tax, so no additional tax is added at the pump.

Frequently Asked Questions

What is the total sales tax rate in my Indiana city?

The total rate is 7 percent state tax plus your local county or city tax. To find your exact rate, enter your zip code on the Indiana Department of Revenue website, or call your local tax assessor's office. Rates vary by location and can range from 7 to 9.5 percent.

Why are groceries not taxed but restaurant food is?

Indiana exempts groceries because they are considered essential food for home consumption. Restaurant meals and prepared foods are taxed because they are considered a service or luxury purchase rather than basic groceries.

Do I pay sales tax on clothes and shoes?

Yes, clothing and shoes are taxed at the regular sales tax rate in Indiana. There is no clothing exemption, so you pay the full 7 percent state rate plus any local tax on apparel purchases.

Is sales tax included in the price shown on the price tag?

No. Price tags in Indiana stores show the pre-tax price. Sales tax is added at the register, so your final bill will be higher than the sticker price.

Do I owe sales tax on items I buy from out-of-state online sellers?

Large online retailers are required to charge Indiana sales tax. Smaller sellers may not, but Indiana residents are technically responsible for reporting use tax on those purchases when filing state income tax, though enforcement for individual purchases is rare.