Indiana's Sales Tax Rate and What It Covers

Indiana's statewide sales tax is 7 percent. This applies to most goods you buy in stores, online, and through mail order. The tax is added at the point of sale — when you check out, not when you receive the item.

Some counties and cities add their own local sales tax on top of the state rate. Lake County (which includes Gary) adds 1 percent, bringing the total to 8 percent in some areas. Marion County (Indianapolis) adds 0.5 percent. Your total rate depends on where you make the purchase, not where you live. If you buy something in a county with a local tax, you pay that county's rate.

Not everything is taxed. Groceries — unprepared food you cook at home — are exempt. Prescription medications are exempt. Clothing and shoes are exempt. Services like haircuts, car repairs, and plumbing are generally not taxed, though some service-related items (like parts) may be.

Key Takeaways

  • Indiana's base sales tax is 7 percent, but some counties add 0.5 to 1 percent on top, so your actual rate depends on where you shop.
  • Groceries, prescription drugs, and clothing are not subject to sales tax in Indiana.
  • Services like repairs and haircuts are usually not taxed, but materials and parts used in those services sometimes are.
  • Online purchases from out-of-state sellers may or may not be taxed depending on whether the seller has a physical presence in Indiana.
  • Restaurants and prepared foods are taxed at the full rate, unlike groceries.

Local Sales Tax Variations by County

Indiana allows counties to impose an additional sales tax, and the rates vary. Lake County charges 1 percent extra, making the total 8 percent. Marion County (Indianapolis) charges 0.5 percent extra, for a total of 7.5 percent. Most other counties have no additional local tax and stick with the 7 percent state rate.

Some counties use their local sales tax revenue for specific purposes — Marion County's extra 0.5 percent goes partly to the Indianapolis Public Library and partly to the county's general fund. Lake County's 1 percent supports various county services. When you shop, the cashier or checkout screen will show you the total rate for that location.

If you live near a county border, you might notice the rate change when you cross it. This matters most for large purchases — a $1,000 item costs $70 in tax at 7 percent but $80 in a county with an extra 1 percent local tax.

What Is and Isn't Taxed in Indiana

Food you prepare at home is not taxed. This includes raw meat, vegetables, bread, milk, eggs, and canned goods. The rule is straightforward: if it's meant to be cooked or prepared at home, it's exempt. However, the moment food is prepared for when ready consumption — a sandwich from a deli counter, a rotisserie chicken, a slice of pizza — it becomes taxable.

Clothing and footwear are exempt from Indiana sales tax. This includes shirts, pants, shoes, socks, hats, and coats. The exemption applies whether you buy them in a store or online. However, accessories like belts, scarves, and jewelry are sometimes taxed because they're classified differently.

Prescription medications are not taxed. Over-the-counter medicines like aspirin or cold medicine are taxed as regular goods. Medical equipment like wheelchairs or hearing aids may may have access to for exemption, but you should ask the seller or check with the Indiana Department of Revenue if you're unsure.

How Sales Tax Works on Online and Out-of-State Purchases

If you order from an online retailer that has a warehouse, office, or other physical location in Indiana, Indiana sales tax applies to your order. This includes major retailers like Amazon (which has fulfillment centers in Indiana), Walmart, and Target. The tax is calculated based on the delivery address — if it's in Indiana, Indiana tax applies.

If you order from a seller with no physical presence in Indiana, the situation is more complex. Technically, Indiana law requires you to pay "use tax" on out-of-state purchases — a tax equal to the sales tax you would have paid. In practice, most small out-of-state sellers do not collect this tax, and Indiana does not actively pursue individual consumers for it. However, larger sellers are increasingly required to collect sales tax even without a physical location in the state.

The safest approach is to assume that any major retailer will charge you Indiana sales tax on delivery to an Indiana address. Smaller sellers may not, and you won't be pursued for the difference as an individual consumer.

Who Collects and Pays Sales Tax

The business selling you the item is responsible for collecting sales tax and sending it to the state. You don't send the tax directly to Indiana — the store or online retailer handles it. The seller is required to register with the Indiana Department of Revenue and file sales tax returns, usually monthly or quarterly depending on the volume of sales.

If you're a business owner in Indiana, you need to register for a sales tax permit before you start selling taxable goods. You'll collect tax from customers and remit it to the state on a schedule determined by how much tax you collect. The Indiana Department of Revenue provides forms and instructions for businesses.

Special Cases and Exemptions

Certain organizations are exempt from paying sales tax. Religious organizations, nonprofits, and government agencies can sometimes purchase items without paying tax if they have a resale certificate or tax-exempt status. Schools and universities also may have access to for exemptions on many purchases.

If you're buying items for resale — you're a retailer buying inventory — you can provide a resale certificate to avoid paying sales tax on your purchase. You'll then collect tax from your customers instead. This prevents the same item from being taxed twice.

Some items are taxed at a different rate or are completely exempt for specific reasons. For example, certain agricultural equipment used in farming may be exempt. If you're unsure whether something is taxed, the seller should be able to tell you, or you can contact the Indiana Department of Revenue.

How to Find Your Local Sales Tax Rate

Your local sales tax rate depends on the county where you're making the purchase. You can find your rate by entering your ZIP code on the Indiana Department of Revenue website, or by asking a cashier at any store in your area. Most receipts also print the tax rate at the bottom.

If you're shopping online, the retailer's website should calculate the correct tax for your delivery address automatically. If it doesn't, contact the seller before completing your purchase to confirm the tax amount.

Frequently Asked Questions

Is clothing taxed in Indiana?

No. Clothing and shoes are exempt from Indiana sales tax. This includes everyday items like shirts, pants, and socks. Accessories like belts and jewelry may be taxed because they're classified as non-clothing items, so check with the seller if you're unsure.

Do I pay sales tax on groceries?

No, not on unprepared food. Raw meat, vegetables, bread, milk, and canned goods are not taxed. However, prepared foods — deli sandwiches, rotisserie chicken, pizza by the slice — are taxed at the full rate because they're considered ready-to-eat.

What's the difference between sales tax and use tax?

Sales tax is collected by the seller when you buy something. Use tax is a tax you're supposed to pay on items you buy from out-of-state sellers who don't collect Indiana tax. In practice, Indiana doesn't pursue individual consumers for use tax, but larger retailers are increasingly required to collect it.

Does Indiana tax online purchases?

If the online retailer has a physical location in Indiana, yes — Indiana sales tax applies to your order. If the seller has no presence in Indiana, they may not collect tax, though larger retailers increasingly do. The tax is based on your delivery address, not where you live.

Can I get a refund of sales tax I already paid?

Generally, no. Sales tax is final once you've paid it. However, if you return an item and receive a refund, the tax you paid on that item is also refunded. Keep your receipt to show the tax amount when you return something.