Indiana's statewide sales tax is 7 percent

Indiana charges a flat 7 percent sales tax on most retail purchases. This rate applies uniformly across the state — there are no local add-ons or county variations like some states have. When you buy something at a store, that 7 percent is calculated on the total before you pay.

The tax applies to tangible goods: clothing, groceries at checkout, electronics, furniture, and similar items you can touch and take home. Services — haircuts, car repairs, plumbing — are generally not taxed. Food prepared and sold hot for immediate consumption (restaurant meals, deli sandwiches) is taxed, but cold groceries you buy to cook at home are not.

Key Takeaways

  • Indiana's sales tax rate is 7 percent statewide with no local variations or county add-ons.
  • The tax applies to most tangible goods but not to services like repairs or haircuts.
  • Groceries sold cold for home preparation are not taxed, but hot prepared food is.
  • Certain items including prescription medications, medical devices, and some utilities are exempt from sales tax.

What is and isn't taxed in Indiana

Most items you buy in a store are subject to the 7 percent tax. Clothing, shoes, toys, household goods, appliances, and vehicles all carry the full rate. The same applies to digital goods like e-books and software downloads — Indiana taxes these the same way it taxes physical products.

Several categories are exempt. Prescription medications sold by a pharmacy are not taxed. Medical devices — including diabetic supplies, hearing aids, and mobility equipment — are also exempt. Groceries purchased cold and uncooked for home preparation are exempt, which means milk, bread, vegetables, and raw meat do not have sales tax added at checkout.

The line between taxed and untaxed food can be confusing. If you buy a rotisserie chicken from a grocery store deli, it is taxed because it is hot and ready to eat. If you buy a raw chicken from the meat counter, it is not taxed. A cold sandwich from a deli case is not taxed, but a hot sandwich made to order is. Coffee and other beverages are taxed whether hot or cold.

How sales tax is calculated on your receipt

The store calculates sales tax on the subtotal of taxable items. If you buy a $20 shirt, the tax is $1.40 (20 × 0.07), and your total is $21.40. If you buy a $20 shirt and a $10 untaxed prescription, the tax applies only to the shirt, so your total is $21.40 plus the $10 prescription.

Most modern cash registers calculate this automatically, so you see the tax broken out on your receipt. Some small retailers or informal sellers may calculate it differently, but the state rate remains 7 percent on all taxable sales. Online retailers shipping to Indiana addresses must also collect and remit the 7 percent tax, though enforcement varies depending on the seller's size and location.

Who collects and where the money goes

The retailer — the store, restaurant, or online seller — collects the sales tax from you at the point of sale. They then remit it to the Indiana Department of Revenue. Retailers file sales tax returns monthly or quarterly depending on their volume and the department's rules.

The revenue collected goes into Indiana's general fund and is distributed to state and local government operations. Some portion supports education, infrastructure, and public services. Individual counties and cities do not add their own sales tax on top of the state rate, which is why Indiana's 7 percent is the only rate you will see regardless of where in the state you shop.

Sales tax on vehicles and major purchases

Vehicle purchases in Indiana are subject to sales tax, calculated on the purchase price. If you buy a car for $25,000, you owe $1,750 in sales tax. This is typically collected when you register the vehicle with the Bureau of Motor Vehicles, not at the dealership, though some dealers collect it upfront as part of the sale.

Trade-in value does not reduce the taxable amount in Indiana. If you trade in a vehicle worth $5,000 toward a $25,000 purchase, you still owe tax on the full $25,000 price, not on the $20,000 difference. This is different from some other states and is an important detail if you are budgeting for a vehicle purchase.

Frequently Asked Questions

Do I pay sales tax on used items?

Yes, used goods sold by a retailer are subject to the 7 percent sales tax. This includes used cars sold by a dealer, used furniture from a store, and used electronics. Private sales between individuals are generally not taxed, but once a business sells it, tax applies.

Is sales tax added to online orders shipped to Indiana?

Most large online retailers now collect and remit Indiana sales tax on orders shipped to Indiana addresses. Smaller sellers may not, depending on their sales volume and nexus in the state. If tax was not collected at checkout, you may owe it when you file your state tax return, though enforcement is limited for individual purchases.

What about sales tax on services like haircuts or car repairs?

Services are not subject to Indiana sales tax. A haircut, oil change, plumbing repair, or dental cleaning has no sales tax added. However, if you buy a product as part of that service — like hair dye or a replacement part — the product portion may be taxed depending on how the business itemizes it.

Are there any temporary sales tax holidays in Indiana?

Indiana does not have an annual sales tax holiday. Some states offer back-to-school or disaster-relief tax-free periods, but Indiana has not adopted this practice. The 7 percent rate applies year-round to all taxable purchases.

Can I get a sales tax refund if I return something?

Yes. When you return a taxable item and receive a refund, the sales tax is refunded along with the purchase price. The refund amount should match what you paid, including the tax portion. Keep your receipt to show proof of the original purchase and tax paid.