Indiana's sales tax rate and what it covers

Indiana has a state sales tax of 7%. When you buy something at a store, that 7% gets added to your bill. Counties and cities in Indiana can add their own local sales tax on top of the state rate, so your total tax depends on where you live. Some counties add 0.5%, others add 1% or more. The total you pay ranges from 7% to around 9.65% depending on your location.

Sales tax applies to most physical goods you buy — clothing, groceries, furniture, electronics, gas. It does not apply to services like haircuts, car repairs, or doctor visits. Food you eat at home is not taxed, but prepared food and restaurant meals are. Medicine you buy with a prescription is not taxed, but over-the-counter medicines and vitamins are.

Key Takeaways

  • Indiana's state sales tax is 7%, and your county or city may add 0.5% to 1.65% more, making your total between 7% and 9.65%.
  • Sales tax applies to most goods but not to unprepared food, prescription medicine, or services.
  • You pay sales tax at the register when you buy something, and the store collects it and sends it to the state.
  • Online purchases from out-of-state sellers may not show Indiana sales tax at checkout, but you may owe it when you file taxes.
  • Certain groups like seniors and people with disabilities may be exempt from sales tax on specific items in some situations.

Where the tax money goes

When you pay sales tax at checkout, the store acts as a collector. The store holds that money and sends it to the Indiana Department of Revenue. The state keeps the 7% portion and passes the local portion to your county or city. That money funds schools, roads, police, fire departments, and other local services.

Stores are required by law to collect and report sales tax. If a store fails to do this, the state can fine them or revoke their license. The store does not keep the tax — it is a pass-through payment.

How local sales tax varies by county

Indiana divides sales tax into state and local portions. The state portion is always 7%. The local portion varies. Marion County (Indianapolis) adds 0.75%. Lake County (Gary area) adds 1.25%. Some smaller counties add only 0.5%. A few areas have no additional local tax beyond the state 7%.

You can find your county's rate by searching "Indiana sales tax by county" or asking at your local city or county assessor's office. The rate matters most when you are comparing prices between counties or when you shop online and need to know what you will actually pay.

What is and is not taxed

Taxed items include clothing, shoes, toys, books, electronics, furniture, appliances, gasoline, and most household goods. Prepared food — pizza, sandwiches, restaurant meals, coffee — is taxed. Alcohol and tobacco are taxed at the regular rate, though tobacco also has a separate state excise tax.

Not taxed: groceries you cook at home (bread, milk, vegetables, meat), prescription drugs, medical devices like hearing aids or wheelchairs, and services (haircuts, plumbing, legal advice). Utilities like electricity and water are not subject to sales tax. Rent is not taxed. Used items sold between individuals are not taxed, though items sold by a business may be.

Some items fall into gray areas. Candy and soda are taxed as prepared food. Vitamins and supplements are taxed because they are not prescription. Seeds and plants for your garden are not taxed if you grow food, but ornamental plants may be. When in doubt, the store cashier or the Indiana Department of Revenue website can tell you.

Online purchases and sales tax

If you buy something online from a large retailer like Amazon or Walmart, Indiana sales tax is usually added at checkout if the seller has a physical presence in Indiana. If you buy from a small out-of-state seller with no Indiana location, they may not collect Indiana tax at checkout. You are still legally responsible for that tax, but it is rarely enforced for individual purchases.

Some online sellers voluntarily collect Indiana sales tax even when not required. Others do not. The law changed in recent years to require more online sellers to collect tax, but enforcement is inconsistent for small purchases. If you are buying in bulk or for a business, assume you owe the tax and ask the seller before checkout.

Sales tax exemptions for specific groups

Indiana offers limited exemptions. Seniors and people with disabilities may be exempt from sales tax on certain items like mobility aids, but the exemption is narrow and requires documentation. You cannot simply show an ID — you need a certificate from the state or a doctor's letter. Ask the store if they accept the exemption before you buy.

Nonprofits and charities can sometimes buy items without paying sales tax if they have a resale certificate or nonprofit exemption certificate. Farmers buying equipment for agricultural use may have exemptions. Businesses buying items to resell do not pay sales tax if they provide a resale certificate to the seller. These exemptions require paperwork and are not automatic.

How to find your exact local rate

Your sales tax rate depends on your address. If you live in one county and shop in another, you pay the tax rate where you make the purchase, not where you live. To find your rate, search online for "Indiana sales tax [your county name]" or visit the Indiana Department of Revenue website. You can also call your county assessor's office.

The rate can change if your city or county passes a new ordinance, though this is rare. Rates are usually stable for years. If you are moving to a new county or city, check the rate so you know what to expect at checkout.

Frequently Asked Questions

Do I pay sales tax on groceries in Indiana?

No, unprepared food you cook at home is not taxed. This includes meat, vegetables, bread, milk, and canned goods. Prepared food — restaurant meals, deli sandwiches, hot pizza — is taxed at the full rate.

What is the sales tax rate in Indianapolis?

Indianapolis is in Marion County, which has a state rate of 7% plus a local rate of 0.75%, for a total of 7.75%. Some special districts within Marion County may have different rates, so confirm your exact address if you are near a border.

Do I owe sales tax on items I buy out of state and bring home?

Technically, Indiana law says you owe "use tax" on items you buy elsewhere and bring into Indiana, but this is almost never enforced for personal purchases. It is mainly enforced for businesses. If you are buying for personal use, you do not need to report it.

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

No, sales tax is final at the register. If you return an item, the store refunds the tax along with the purchase price. If you paid tax on something you later learned was exempt, you would need to contact the store or the Indiana Department of Revenue, but refunds are rare.

Is sales tax added to the price shown on the shelf?

No, the shelf price does not include sales tax. The tax is added at checkout. This is why your total bill is higher than the price tag. Some stores show the tax amount on the receipt so you can see the breakdown.