Indiana's statewide sales tax rate is 7 percent

Indiana charges a 7 percent sales tax on most retail purchases. This is the base rate that applies across the entire state. However, your actual tax rate depends on where you shop — many counties and cities add their own local sales taxes on top of the state rate, which means you may pay between 7 and 7.5 percent depending on your location.

The state tax applies to tangible goods you can touch and take home: clothing, groceries, electronics, furniture, and most other items. Services — like haircuts, car repairs, or plumbing — are generally not taxed in Indiana. Food bought at a restaurant is taxed, but unprepared food from a grocery store is not.

Key Takeaways

  • Indiana's base sales tax is 7 percent, but local counties and cities may add 0 to 0.5 percent on top of that rate.
  • The tax applies to physical goods but not to services like repairs, haircuts, or professional labor.
  • Groceries and unprepared food are not taxed, but prepared food from restaurants and food courts is taxed.
  • You can find your exact local rate by entering your address on the Indiana Department of Revenue website or asking a retailer in your area.

How local taxes add to the state rate

While Indiana's state rate is 7 percent, 92 of Indiana's 92 counties have added a local income tax that does not affect sales tax. Instead, some cities and towns have chosen to add a local sales tax on top of the state rate. These local additions range from 0 to 0.5 percent, depending on where you live.

For example, if you shop in Marion County (which includes Indianapolis), you pay 7 percent state tax plus any local rate that applies in your specific city or neighborhood. A few areas have no additional local tax, so you pay exactly 7 percent. Other areas add the maximum 0.5 percent, bringing your total to 7.5 percent.

The local tax money goes to the city or county government for schools, roads, and public services. It is collected at the same time as the state tax — you see one combined number on your receipt.

What is and is not taxed in Indiana

Sales tax in Indiana applies to most items you buy in a store: clothing, shoes, electronics, furniture, toys, books, and household goods. It also applies to prepared food — anything you buy ready to eat, including restaurant meals, fast food, deli items, and food from a grocery store hot bar.

Items that are not taxed include unprepared groceries (raw meat, vegetables, bread, milk, eggs), prescription medications, and most services. If you hire someone to fix your car, paint your house, or cut your hair, that labor is not taxed. However, if you buy a product as part of that service — like paint or car parts — the product itself may be taxed depending on how the invoice is written.

Clothing and shoes are taxed at the full rate with no special exemption. Indiana does not have a "back-to-school" tax holiday or clothing exemption like some other states.

Finding your exact local sales tax rate

To find the precise sales tax rate where you live or shop, visit the Indiana Department of Revenue website and use their sales tax rate lookup tool. You enter your city or ZIP code, and it shows you the combined state and local rate for that location.

You can also call a local retailer and ask what rate they charge, or look at a recent receipt from a store in your area — the tax rate is usually printed on it. If you are shopping online from an Indiana address, the retailer should charge you the sales tax rate for your delivery location, though this depends on the retailer's policies and whether they have a physical presence in Indiana.

Sales tax on online and out-of-state purchases

If you order something online from a retailer that has a store or warehouse in Indiana, the retailer must charge you Indiana sales tax based on your delivery address. Large online retailers like Amazon collect and send this tax to the state.

If you order from a retailer with no physical location in Indiana, they may not charge you sales tax at the time of purchase. However, Indiana law technically requires you to pay "use tax" — which is the same rate as sales tax — on items you bring into the state. In practice, most individuals do not report use tax on personal purchases, though it remains a legal obligation.

How sales tax is used in Indiana

Indiana's 7 percent state sales tax revenue goes into the state's general fund, which supports schools, roads, public safety, and other state services. The local portion — the 0 to 0.5 percent added by cities and counties — stays in that community and typically funds local schools, police and fire departments, and infrastructure projects.

Unlike income tax, which is withheld from paychecks, sales tax is collected at the point of purchase. Retailers collect it and send it to the state and local governments on a regular schedule, usually monthly or quarterly depending on the retailer's size.

Frequently Asked Questions

Do I pay sales tax on groceries in Indiana?

No, unprepared groceries like raw meat, vegetables, bread, milk, and eggs are not taxed. However, prepared food — including deli items, hot bar food, and anything from a restaurant — is taxed at the full rate.

What is the sales tax rate in Indianapolis?

Indianapolis is in Marion County. The state rate is 7 percent, and Marion County adds a local rate that varies by neighborhood. Check the Indiana Department of Revenue website with your specific address to see your exact combined rate.

Do I have to pay sales tax on services?

Most services are not taxed in Indiana. Car repairs, haircuts, plumbing, and professional labor are generally tax-free. However, if you buy a physical product as part of the service — like parts or materials — that product may be taxed.

Why is my sales tax different in different cities?

Indiana allows cities and counties to add their own local sales tax on top of the 7 percent state rate. Each community decides whether to add a local tax and at what rate, so the total you pay depends on where you shop.

Do online retailers charge Indiana sales tax?

If the online retailer has a store or warehouse in Indiana, they must charge you sales tax based on your delivery address. If they have no physical presence in Indiana, they may not charge tax, though Indiana law requires you to pay use tax on such purchases.