Retiring in Indiana

Every figure below is sourced to Indiana’s own publications and dated. Estimates only, and not tax advice.

Retirement tax by state

What your state actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, not a yes/no list.

Brokerage account growth

Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.

Roth vs. Traditional

Decided on the two rates that actually govern it — yours now, and yours at withdrawal, in the state you'll retire in rather than the one you're in.

Contribution limit optimizer

2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.

Required minimum distribution

When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.

Backdoor Roth pro-rata

What a backdoor Roth conversion would actually cost you in tax — the pro-rata rule most calculators only describe.

Self-directed IRA real estate (UDFI)

The tax a leveraged rental owes inside a self-directed IRA — computed at trust rates, not the rate you'd assume.

Indiana at a glance

401(k) and IRA withdrawals
Taxed
Social Security
Not taxed
Top marginal rate
2.95%
A flat rate on all taxable income.
Tax year
2026
Brackets are legislated and change on a fixed calendar, so the year matters.
  • Indiana is a low-headline-rate, low-relief state for retirees: the 2.95% flat rate is among the lowest in the country, but almost no retirement income escapes it except Social Security and military pay, and the county tax applies on top of whatever remains.
  • Because the civil service annuity deduction is reduced dollar for dollar by Social Security and Railroad Retirement tier 1 benefits, a calculator that applies the flat $16,000 without the offset will overstate the deduction for nearly every real retiree.
  • The military retirement deduction covers survivor's benefits as well as the retiree's own pay, and carries no age trigger - the ageTrigger of 62 recorded on this block belongs to the civil service annuity deduction only and must not be applied to the military entry.
  • THIS RECORD EXPIRES ON A KNOWN DATE. Indiana's flat rate steps down again to 2.90% for tax year 2027 under the same legislated schedule that produced the 2.95% figure here, so a 2026 record still in place during 2027 will overstate every Indiana tax bill rather than merely drift.

Local income tax applies in parts of Indiana

ALL 92 INDIANA COUNTIES LEVY A LOCAL INCOME TAX (LIT), and for most Indiana taxpayers it is a larger share of the bill than the headline flat rate suggests: the top county rate of 3.00% now EXCEEDS the 2.95% state rate. The 2026 range is 0.50% (Porter) to 3.00% (Randolph); the examples above are a representative spread across that range and across the major population centres, not a complete list. THE RULE THAT DECIDES WHICH RATE APPLIES IS COUNTY OF RESIDENCE ON JANUARY 1, not where the taxpayer works and not where they live in December. Both the county of residence and the county of principal business or employment are determined on January 1 of the year in which the taxable year begins; residence governs, and only if the individual lives out of state on January 1 does the county of principal work location apply instead. Because the determination is annual and made on a single date, a mid-year move does not change the rate for that year. Rates are set by county income tax councils and change frequently - the Department reissues Departmental Notice #1 during the year and asterisks each county whose rate has moved; Carroll, Grant, Greene, Howard, Shelby and Union all changed between the October 1, 2025 issue and this one. DO NOT ROUND THESE RATES. Several counties carry six-decimal rates in the Department's table - Brown 0.025234, Carroll 0.024733, Jasper 0.02864, Whitley 0.016829 - and rounding them to two decimal places introduces error that compounds across a full year of withholding.