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This article was fact-checked by our editors and reviewed by CPA candidate Janet Murphy, senior product specialist with Credit Karma Tax®. It has been updated for the 2019 tax year.
If there were an Indy 500 for state income tax deductions, Indiana might have a good chance of racing past other states.
Consider yourself lucky if you live in the Hoosier State. It’s not only the site of the annual race that draws hundreds of thousands to the Indianapolis Motor Speedway, but it’s also home to a bounty of tax deductions and refunds that could lower your state income tax bill. On top of that, the state has a flat tax rate of 3.23%.
Here are some things to know about your Indiana state taxes.
- What are the basics of Indiana state taxes?
- What are some Indiana deductions, exemptions and credits?
- How can I file an Indiana state tax return?
- What if I owe and can’t pay?
- How can I track an Indiana tax refund?
You may need to file an Indiana income tax return if you lived in the state for at least part of the year and received income, or if you earned income from an Indiana source no matter where you lived.
To pay your state income tax, you’ll be working with the Indiana Department of Revenue. You can call the agency at 1-317-232-2240 or email firstname.lastname@example.org if you have any questions. You can also write to …
Indiana Department of Revenue
Re: Individual Income Tax
P.O. Box 7207
Indianapolis, IN 46207-7207
Filing and payment deadline
You have until April 15 each year to file your Indiana tax return and pay any taxes due, just like you do on federal returns. If the 15th falls on a weekend or a holiday, the filing deadline is extended to the next business day.
If you need more time to file your state tax return, you may be able to get an extension, but you’ll have to meet qualifications. Your Indiana state tax payment is still due on April 15. You can learn more about how to file an extension on the state website.Things to know about requesting a federal tax filing extension
Choosing a filing status on your Indiana state tax return could get confusing.
Unlike the federal 1040, Indiana’s main form — IT-40 — doesn’t list all the federal filing statuses. The form has fields for the filer’s personal information and the personal information of a spouse if filing a joint return, and there’s a box to check if you’re married filing separately.
But the state advises that you should generally use the same filing status on your state return as you did on your federal return.
Indiana has three income tax forms. You’ll have to pick a form based on your residency status (and that of your spouse, if applicable).
Indiana income tax rate
The state charges taxpayers a flat income tax rate of 3.23%, regardless of income level. (In addition, many Indiana counties have an additional income tax.) The flat state rate means calculating your tax liability should be a breeze. But don’t forget to take advantage of the surfeit of tax credits and deductions, which can help you lower your bill further.Learn more about federal income tax rates and tax brackets
Indiana offers numerous deductions and credits that could help you reduce your state tax liability. Additionally, Indiana allows exemptions for filers and dependents, even if you don’t claim exemptions on your federal return.
For 2019, the state exemption amount is $2,000 for those married filing jointly and $1,000 for all other filers. You can claim a $1,000 exemption for each qualifying dependent, and you may be eligible for an additional $1,500 exemption for certain dependent children. Taxpayers who are 65 or older, or legally blind, can also take an additional $1,000 exemption each for themselves and their spouses if filing jointly.
- Adoption credit: If you adopted a child during the tax year and claimed the adoption credit on your federal tax return, you may be eligible to claim up to 10% of the federal credit or $1,000 per child, whichever is less, on your state tax return.
- CollegeChoice 529 education savings plan credit: If you save money for your own or someone else’s college costs in Indiana’s CollegeChoice 529 savings plan, you may be able to take a tax credit for a percentage of your contributions up to a maximum dollar amount.
- School scholarship credit: If you donated to a qualifying organization that grants scholarships, you might be able to take a tax credit worth up to half of your total donations.
- Credit for taxes paid to other states: If you paid income taxes to another state, Indiana may allow you to take credit for those taxes, depending on the state. This can help you avoid double-taxation.
- Indiana state and county tax withholding credits: You may be able to claim a tax credit for state and county income tax withholding amounts.
- Indiana’s earned income tax credit: If you claimed an earned income tax credit on your federal tax return, you may also be able to claim one on your Indiana state taxes, depending on your income.
- Public school educator expense credit: Teachers, librarians and other eligible educators who work in a K-12 public school in Indiana and pay for certain classroom supplies can get a tax credit of up to $100 ($200 if you’re filing jointly and both you and your spouse qualify for the credit ).
- Enterprise zone deduction: Indiana has designated several “enterprise zones” throughout the state in areas like Indianapolis and Evansville. If you live in and work for a qualifying employer in one of these areas, you can get a form IT-40QEC from your employer to take this deduction. And it’s a big deal — you might be able to deduct half of your earned income up to a maximum of $7,500 (or a combined maximum of $15,000 if you and your spouse both received the form).
- Private school/home-school deduction: Parents who send their children (or other dependents) to a private school or who home school them may be able to claim a deduction of up to $1,000 per qualifying child.
- Renter’s deduction: If you’re living in a rented place that is subject to Indiana state property tax (student housing, government housing and nonprofit housing won’t count) and it was your primary place of residence during the tax year, you can deduct up to $3,000 of rent paid.
- Residential homeowners property tax deduction: If you own a home and it’s your principal place of residence, you may be able to deduct up to $2,500 of state property taxes paid on it.
- Unemployment compensation deduction: Unemployment compensation is typically considered taxable income on your federal and state returns. In Indiana, you might be eligible for a tax deduction that could lower or even wipe out any state taxes due on your unemployment compensation during the year.
When it comes to filing your Indiana state tax return, you can do it online or send it in by mail.
Filing your state tax return electronically may be the fastest and easiest option. You can e-file your return by using …
- The Department of Revenue’s INfreefile portal, which allows lower income taxpayers to file state and federal taxes online for free
- Online filing companies from the Department of Revenue’s list of approved software providers, including Credit Karma Tax®, which never charges a fee to prepare or file your federal and state returns — be aware some other providers may charge a fee
- A paid tax professional
To file your taxes by mail, you’ll need to download and complete the tax forms — click on “current year tax forms.” Mail your forms and any additional documents to either of these addresses:
If you’re expecting a refund:
Indiana Department of Revenue
Re. Individual Income Tax
P.O. Box 40
Indianapolis, IN 46206-0040
If you’re sending a tax payment:
Indiana Department of Revenue
Re. Individual Income Tax
P.O. Box 7224
Indianapolis, IN 46207-7224
You can set up a payment plan with the Indiana Department of Revenue if you’re not able to pay your tax liability and owe more than $100. To request a payment plan after you receive a bill, go online to the Department of Revenue’s Intax Pay portal or call 1-317-232-2165.
The payment period can range from 12 to 36 months, depending on the amount you owe. You’ll have to pay a 10% penalty on the amount. And interest will continue to build until you pay off the balance.
For any unresolved or complex tax concerns, you can contact the Department of Revenue’s Taxpayer Advocate Office.
If you’re expecting a refund, there are three ways to track its status. You can check online, call the automated refund line at 1-317-233-4018, or call the live help line at 1-317-232-2240 from 8 a.m. to 4:30 p.m. Monday through Friday. You’ll need to have a few things handy: your Social Security number, the amount of your refund and the tax year you’re interested in.
Although Indiana’s income tax rate couldn’t be easier to understand, filing your state tax return could be tricky if you’re interested in claiming some credits and deductions. You’ll need to research eligibility for those credits and deductions while being sure to file the right forms to claim them.
If you’re expecting a refund, file your Indiana income tax return electronically to get your refund faster, the state says, because the processing time for a paper return can take up to 12 weeks. Plus you might be among the 2 million Hoosiers who qualify for the state’s free e-filing service, which means you can enjoy your refund sooner — for free.
A senior product specialist with Credit Karma Tax®, Janet Murphy is a CPA candidate with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.