Indiana’s individual income tax rate drops again on Jan. 1, 2027, from 2.95% to 2.90%. The Indiana Department of Revenue says the rate “will adjust in 2027 to 2.90%,” and the Tax Foundation’s state tax roundup puts the effective date at Jan. 1, 2027. The cut is five hundredths of a percentage point, worth about $5 for every $10,000 of taxable income.
What Indiana’s revenue department says the rate is
The department’s rates page, dated Sept. 18, 2026, states it plainly: “The Indiana Individual adjusted gross income tax rate for 2026 is 2.95% and will adjust in 2027 to 2.90%.” The page applies to income earned in those tax years, so the new rate governs the return filed for 2027, not the one filed this winter.
Indiana taxes income at one flat rate, so there is no bracket to climb into and every filer gets the same percentage cut. A retiree with $40,000 of taxable income would owe about $1,160 at 2.90% against $1,180 at 2.95%, a $20 difference…