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PaycheckDesk

Indiana · tax year 2026

Does Indiana tax tips and overtime?

Both deductions cut your state tax too.

Indiana charges a flat 2.95% on federal AGI less a $1,000 exemption per filer, and under SB 243 it follows BOTH federal deductions — but for tax year 2026 only. Important: every Indiana county also levies its own income tax (0.5%-2.95%), which is not included in the figure here, so your real Indiana tax is higher.

What it means on a real paycheck

Take a single filer earning $50,000 a year, $8,000 of it in tips. Against the same person with no tips to declare, the federal deduction is worth $960.

In Indiana it is worth $236 more, because the state follows the federal deduction. Together that is $1,196.

How Indiana works out the tax

Indiana charges a flat 2.95%, after an exemption of $1,000 a person. It begins from your federal adjusted gross income and applies its own reliefs from there.

Worth knowing about Indiana

The relief is only for this year

This state matched the federal deductions for 2026 only. Unless it acts again, the same paycheck will be taxed differently next year.

Your own numbers

Your gross pay before any taxes or deductions.

Married filing separately cannot claim these deductions at all, so it is not offered here.

Traditional, pre-tax. Lowers income tax but not Social Security or Medicare.

Pre-tax cafeteria-plan premiums. These lower income tax and FICA.

Take-home pay per paycheck (26 per year)

$1,931

$50,198 a year after taxes and deductions.

Indiana charges a flat 2.95% on federal AGI less a $1,000 exemption per filer, and under SB 243 it follows BOTH federal deductions — but for tax year 2026 only. Important: every Indiana county also levies its own income tax (0.5%-2.95%), which is not included in the figure here, so your real Indiana tax is higher. See what that costs you →

Where the money goes each year

Gross salary$62,000
Federal income taxTop rate applied: 12%−$5,260
Social Security−$3,844
Medicare−$899
State income tax (IN)Flat 2.95% on $61,000 of state taxable income−$1,800
Take-home pay$50,198

Per paycheck

Gross$2,385
Taxes withheld−$454
Net$1,931

Estimate for tax year 2026 assuming the standard deduction, no dependents or credits, and even pay across the year. Your employer withholds using your Form W-4, so an individual paycheck can differ. Effective total tax rate: 19.04%. Not tax advice.

Where these figures come from

Indiana’s rates and reliefs here were taken from Indiana’s own publication and last checked on 2026-07-31. A state appears in this calculator only once its figures have been read off that state’s own paperwork and covered by tests — never estimated, and never copied from another site.

Figures on this page are for tax year 2026 and were last checked against the primary sources on 2026-07-31. See our sources. This is an estimate, not tax advice.

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