Indiana's statewide sales tax is 7 percent

Indiana charges a 7 percent sales tax on most goods and services you buy in the state. This is the base rate that applies everywhere in Indiana. However, your actual tax at checkout may be higher because counties and some cities add their own local sales taxes on top of the state rate.

The total tax you pay depends on where you shop. A purchase in one county might cost you 7 percent tax, while the same item in another county could cost 8 or 9 percent. This variation matters most for big purchases like furniture, appliances, or vehicles.

Key Takeaways

  • Indiana's state sales tax is 7 percent, but your total tax rate includes county and local additions that range from 0 to 2 percent.
  • The highest combined rates in Indiana reach 9.65 percent in some cities, while the lowest stays at 7 percent in counties with no local tax.
  • Food purchased at grocery stores is not taxed in Indiana, but prepared food and restaurant meals are taxed at the full rate.
  • Prescription medications are exempt from sales tax, but over-the-counter drugs and vitamins are taxed.
  • You can find your exact local rate by entering your address on the Indiana Department of Revenue website or asking a cashier.

How county and local taxes add to the state rate

Indiana allows counties to add up to 1 percent in local sales tax, and cities can add up to 1 percent more on top of that. Not every county uses this power, and not every city within a county charges the same rate. Marion County (which includes Indianapolis) adds 0.5 percent at the county level, bringing the base to 7.5 percent. Some cities in Marion County then add another 0.65 percent, reaching 8.15 percent total.

Lake County, which includes Gary and other areas near Chicago, has some of the highest rates in the state. The county adds 1 percent and some municipalities add another 0.65 percent, resulting in combined rates of 8.65 percent or higher in certain cities. By contrast, some rural counties add no local tax at all, keeping the rate at exactly 7 percent.

The variation can be significant on large purchases. A $1,000 appliance costs $70 in state tax alone, but with a 2 percent local addition, you would pay $90 in total tax—a $20 difference.

What is and is not taxed in Indiana

Groceries are not taxed in Indiana. This includes unprepared food like meat, produce, bread, and dairy products. However, prepared foods and restaurant meals are taxed at the full rate. If you buy a rotisserie chicken from a grocery store deli, it is taxed. If you buy raw chicken to cook at home, it is not.

Prescription medications are exempt from sales tax. Over-the-counter medications like pain relievers, cold medicine, and allergy pills are taxed. Vitamins and supplements are also taxed. Clothing and shoes are taxed in Indiana, unlike some other states that exempt them.

Services are generally not taxed, but there are exceptions. Haircuts and salon services are not taxed. Repair services on goods are not taxed. However, certain services related to telecommunications and utilities may have different rules depending on the type of service.

Finding your exact local sales tax rate

The Indiana Department of Revenue maintains a sales tax rate lookup tool on its website. You enter your street address, city, and ZIP code, and the tool returns your exact combined state and local rate. This is the most accurate way to know what you will pay, since rates can vary by address even within the same city.

You can also call your local county assessor's office or ask a cashier at a store in your area. Most retailers know their local rate and can tell you when ready. If you are shopping online and the seller is based in Indiana, they should charge your local rate based on your shipping address.

Sales tax on vehicles and large purchases

Vehicle purchases are subject to Indiana sales tax. The tax is calculated on the purchase price of the car, truck, or motorcycle. If you trade in a vehicle, the tax is applied to the difference between the new vehicle's price and your trade-in value, not the full purchase price. This can result in significant savings on tax for large trades.

For example, if you buy a car for $20,000 and trade in a vehicle worth $5,000, you pay sales tax on $15,000, not $20,000. At a 7 percent rate, that saves you $350 in tax. At a combined rate of 9 percent, the savings would be $450.

The same trade-in rule applies to other large purchases like boats and recreational vehicles. You will pay the tax when you register the vehicle with the Indiana Bureau of Motor Vehicles, not at the dealership.

Online purchases and sales tax

Online retailers are required to charge Indiana sales tax on purchases shipped to addresses in Indiana. This applies whether the retailer is based in Indiana or out of state. The tax charged should match your local rate based on your shipping address.

Some older online retailers may not charge sales tax, but this is becoming less common. If you notice that a retailer did not charge tax on an Indiana delivery, you are technically responsible for reporting and paying the tax yourself, though few individuals do. The Indiana Department of Revenue focuses enforcement on large retailers rather than individual buyers.

Frequently Asked Questions

Does Indiana tax groceries?

No. Unprepared food like meat, produce, bread, and dairy products are not taxed. Prepared foods, restaurant meals, and items from deli counters are taxed at the full rate.

What is the sales tax in Indianapolis?

Indianapolis is in Marion County. The base rate is 7.5 percent (state 7 percent plus county 0.5 percent). Some areas of Indianapolis add an additional 0.65 percent local tax, bringing the total to 8.15 percent. Use the Indiana Department of Revenue lookup tool with your exact address to confirm your rate.

Do I pay sales tax on prescription drugs?

No. Prescription medications are exempt from sales tax. Over-the-counter medications, vitamins, and supplements are taxed at the full rate.

Is clothing taxed in Indiana?

Yes. Clothing and shoes are subject to Indiana sales tax at the full rate, unlike some states that exempt apparel.

How much sales tax do I pay on a car purchase?

You pay sales tax on the final purchase price, minus any trade-in value. If you buy a $20,000 car and trade in a vehicle worth $5,000, you pay tax on $15,000. The rate depends on your county and city, ranging from 7 to 9.65 percent.