Indiana's statewide sales tax is 7%, but your total rate depends on your county

Indiana has a 7% state sales tax that applies to most purchases. However, the total tax you pay at checkout varies by county because many Indiana counties add their own local sales tax on top of the state rate. Your final rate could be anywhere from 7% to 7.5%, depending on where you live and shop.

The state tax of 7% goes to Indiana's general fund. County taxes, which range from 0% to 0.5%, are collected for local purposes like schools, infrastructure, or public safety. When you buy something, the retailer charges you both rates combined.

Some products are taxed differently or not at all in Indiana, regardless of your county. Groceries, prescription medications, and certain medical equipment are exempt from sales tax. Other items like prepared food, clothing, and household goods are taxed at the full rate.

Key Takeaways

  • Indiana's base sales tax is 7%, but 42 of Indiana's 92 counties add a local tax of 0.25% or 0.5%, bringing your total to 7.25% or 7.5%.
  • Groceries and prescription medications are not subject to sales tax in Indiana, but prepared food and restaurant meals are taxed at the full rate.
  • The county where you make the purchase determines your tax rate, not the county where you live.
  • Clothing and shoes are taxed at the full state and local rate; Indiana does not exempt apparel the way some states do.

County-by-county tax rates in Indiana

Fifty counties in Indiana charge only the 7% state tax and no additional local tax. These are spread across the state and include counties like Decatur, Fulton, and Ripley.

Forty-two counties add either 0.25% or 0.5% to the state rate. Marion County (Indianapolis) charges 0.5%, bringing the total to 7.5%. Lake County (Gary area) also charges 0.5%. Most other counties that have a local tax charge 0.25%, for a total of 7.25%.

To find your county's exact rate, search online for "[County name] Indiana sales tax" or ask a retailer. The Indiana Department of Revenue maintains a list of all county rates on its website, though the easiest method is to check your receipt from a recent purchase — the tax rate is printed there.

What is and is not taxed in Indiana

Not taxed: Groceries (unprepared food you cook at home), prescription medications, insulin, medical devices prescribed by a doctor, and certain mobility aids. Diapers and feminine hygiene products are also exempt.

Taxed at full rate: Restaurant meals and prepared food, candy and soda, clothing and shoes, household goods, electronics, furniture, and gasoline. Clothing is taxed even though some neighbouring states exempt it.

Partially taxed or special cases: Alcohol is subject to sales tax plus additional excise taxes. Cigarettes and vaping products are taxed and also subject to state excise taxes. Digital products like e-books and streaming services are generally not taxed in Indiana.

How local county taxes are used

When a county adds a local sales tax, the money stays in that county. The specific use depends on what the county voters approved when the tax was created. Some counties use the revenue for schools, others for roads and bridges, and some for public safety or health services.

Marion County's 0.5% local tax, for example, was approved to fund local government operations and services. Lake County's local tax supports similar county functions. Smaller counties that have added a local tax typically use it for specific projects or ongoing services that the county identified as a need.

Sales tax on online and out-of-state purchases

If you order something online from a retailer that has a physical location in Indiana or meets certain sales thresholds, Indiana sales tax applies to your order. The rate depends on the delivery address — if it ships to an address in Marion County, you pay 7.5%; if it ships to a county with no local tax, you pay 7%.

Retailers are required to collect Indiana sales tax on online orders if they have "nexus" in the state, meaning they have a warehouse, office, or employees here, or if they exceed certain sales volumes. Large retailers like Amazon, Walmart, and Target collect Indiana sales tax on all orders shipped to Indiana addresses.

Smaller retailers may not collect Indiana sales tax at checkout. If you buy from an out-of-state retailer that did not collect tax, Indiana law technically requires you to report and pay the tax yourself on your state income tax return, though this is rarely enforced for individual purchases.

Comparing Indiana's rate to neighbouring states

Indiana's 7% state rate is lower than Ohio (5.75% state plus local), higher than Kentucky (6% state plus local), and similar to Illinois (6.25% state plus local). When you add county taxes, Indiana's total can reach 7.5%, which is competitive with the region.

One difference: Indiana taxes clothing, while Ohio and Kentucky exempt most apparel. This means a $100 clothing purchase costs more in Indiana than in those states, even if the base rates are similar.

If you live near a state border, the tax rate difference might matter for large purchases. However, Indiana law requires you to pay Indiana tax on items you bring back into the state, so buying across the border to avoid tax is not a legal workaround.

Frequently Asked Questions

Does Indiana have a sales tax holiday?

Indiana does not have an annual sales tax holiday for back-to-school shopping or any other category. Some states offer a few days each year when clothing or school supplies are tax-free, but Indiana does not. You pay the full sales tax on all taxable items year-round.

Is there sales tax on used items or secondhand purchases?

Sales tax applies to used items sold by retailers, including used cars, used furniture, and used electronics from a store. Private sales between individuals are not subject to sales tax. If you sell a used item to a friend, no tax is collected.

What about sales tax on services?

Most services in Indiana are not subject to sales tax. Haircuts, car repairs, plumbing, and consulting services are generally tax-free. However, some services bundled with products — like installation or delivery — may be taxed depending on how the retailer structures the charge.

Do I pay sales tax when I buy something in another state and bring it back to Indiana?

No. You pay the sales tax of the state where you make the purchase. If you buy something in Kentucky and bring it home to Indiana, you paid Kentucky tax (or no tax, depending on the item). You do not owe Indiana tax on items already purchased and taxed elsewhere.

Is there a difference between sales tax and use tax in Indiana?

Indiana has both. Sales tax is what you pay at checkout. Use tax is a tax on items you bring into Indiana that were not taxed when purchased — for example, items ordered from a state with no sales tax. Technically you owe use tax, but it is rarely enforced for individual consumers.