Indiana Capital Gains Tax Calculator

Indiana has been stepping its rate down for several years, and unlike states whose reductions depend on revenue conditions being met, the next step is already set. The Department states both figures in one sentence: the rate for 2026 is 2.95% and will adjust in 2027 to 2.90%.

That certainty is worth something when planning a sale. In a trigger state, deferring a disposal into next year to catch a lower rate is a bet on a determination that has not been made. In Indiana the 2027 figure is published in advance, so the five-basis-point difference is a known quantity rather than a hope — though on any realistic gain it is small against the federal consequences of moving the sale.

Indiana taxes capital gains as ordinary income at the flat rate. There is no state equivalent of the federal 0/15/20% ladder, no exclusion for long-held assets and no reduction for having held an asset beyond a year. The whole of the holding-period benefit is federal.

The flat structure has one practical advantage: because the rate does not vary with income, the state figure is a simple proportion of the gain. A large sale and a small one attract the same percentage, and there is no bracket for a gain to straddle.

Because the county layer can rival the state layer in size, an Indiana taxpayer who stops at the figure on this page is looking at perhaps two thirds of the answer. The rate you need is the one for the county you were resident in on 1 January of the tax year, not the county where the asset was, and not where you live when you file.

The Department publishes the full chart in Departmental Notice #1, and the current IT-40 instruction booklet carries the same figures for individual filers. Both are linked from the Department page cited at the foot of this page. Rates run from well under 1% to over 3% depending on the county, so the range genuinely matters rather than being a rounding question.

Watch the January and October adjustment dates if you are checking mid-year. A county rate can move twice within a single tax year, and a chart pulled in February may not be the one that governs a December sale.

Indiana’s 2.95% is among the lowest state rates in the country, and the comparison with its neighbours changes shape once the county layer is included.

On the state figure alone Indiana sits below Michigan at 4.25% and Illinois at 4.95%, and just above Ohio at 2.75%. Add a mid-range Indiana county rate of around 1.5% and the combined figure lands close to Michigan’s and above Ohio’s state rate — though Ohio has municipal income taxes of its own that this calculator also does not compute.

The general point is that headline state rates are a poor guide in exactly the states where local income taxes are common. Indiana, Ohio, Michigan, Maryland, New York and Pennsylvania all have layers beneath the state one, and comparing their state rates alone compares the wrong thing.

Nothing federal changes because you live in Indiana. The rate ladder for long holdings, the surtax on investment income and the home-sale and depreciation rules are worked out first, in the same way for every filer in the country.

The state figure here stacks your gain on federal ordinary taxable income. Indiana starts from federal adjusted gross income and applies its own add-backs, deductions and exemptions, none of which are modeled here. Combined with the missing county layer, an Indiana result should be read as the state component of a larger bill rather than the bill itself.