Indiana's statewide sales tax 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. Some counties and cities add their own local sales tax on top of the state rate, which means your total tax at checkout can be higher than 7 percent depending on where you shop.
The tax is collected by the retailer at the point of sale and sent to the Indiana Department of Revenue. You pay it when you buy tangible goods — clothing, groceries, electronics, furniture, and similar items. Services are generally not taxed in Indiana, though there are exceptions.
Key Takeaways
- Indiana's base sales tax rate is 7 percent, but local county and city taxes can add 0.25 to 2.5 percent more depending on your location.
- Groceries, prescription medications, and medical devices are exempt from sales tax in Indiana.
- Services like haircuts, repairs, and professional fees are not subject to sales tax, but labor charges bundled with product sales sometimes are.
- You can find your exact local sales tax rate by entering your address on the Indiana Department of Revenue website or asking the retailer.
How local taxes add to the state rate
While the state rate is 7 percent, Indiana allows counties and cities to impose additional sales taxes. These local rates vary widely. Some counties add as little as 0.25 percent, while others add up to 2.5 percent. This means your total sales tax can range from 7 percent to as high as 9.5 percent depending on where you live and shop.
For example, Marion County (which includes Indianapolis) has a combined rate of 7.25 percent. Lake County in the northwest has a higher combined rate. The only way to know your exact rate is to check your specific location, since it depends on both the county and sometimes the city or township where the purchase happens.
What is and isn't taxed in Indiana
Exempt from sales tax: Groceries (unprepared food), prescription medications, over-the-counter drugs, medical devices, and certain medical equipment are not taxed. Clothing is also exempt. Newspapers and magazines are exempt. Utilities like electricity and natural gas are not subject to sales tax.
Subject to sales tax: Prepared food (restaurant meals, deli items, hot food from a grocery store), alcohol and tobacco, gasoline, clothing accessories (belts, hats, scarves), and most retail goods are taxed. Services like haircuts, plumbing repairs, and accounting are not taxed, but if you buy a product as part of that service — like paint for a painting job — the product portion may be taxed depending on how the invoice is structured.
The line between taxable and exempt can be unclear. A sandwich from a deli counter is taxed as prepared food, but a loaf of bread from the shelf is not. If you are unsure whether something will be taxed, ask the retailer before you buy.
Finding your exact local sales tax rate
The Indiana Department of Revenue maintains a sales tax rate lookup tool on its website. You enter your street address, city, and zip code, and the tool returns your combined state and local rate. This is the most accurate way to find out what you will pay.
You can also call the Indiana Department of Revenue at 317-232-2240 during business hours, or ask the retailer directly. Many stores display their local rate at the register or on their website. If you shop online and the seller is based in Indiana, they will charge your local rate based on the delivery address you provide.
How sales tax works on online purchases
Indiana requires online retailers to collect and remit sales tax on purchases delivered to Indiana addresses, regardless of where the retailer is located. This means you pay the same sales tax on an online purchase as you would buying the same item in a physical store in your area.
The retailer uses your delivery address to determine which local rate applies. If you order something online for delivery to your home in Indianapolis, you pay Marion County's combined rate. If you have it shipped to a different county, the rate changes based on that location.
Sales tax on specific items you might buy
| Item | Taxed? | Notes |
|---|---|---|
| Groceries (unprepared) | No | Bread, milk, vegetables, meat from the shelf are exempt. |
| Restaurant meal | Yes | Prepared food is taxed at the full rate. |
| Prescription medication | No | Requires a valid prescription. |
| Over-the-counter medicine | No | Vitamins, pain relievers, cold medicine are exempt. |
| Clothing | No | Shirts, pants, shoes, coats are exempt. Accessories may vary. |
| Gasoline | Yes | Taxed at the pump. |
| Haircut | No | Services are not taxed. |
| Car repair | No | Labor is not taxed, but parts may be. |
Frequently Asked Questions
Does Indiana tax groceries?
No. Unprepared food like bread, milk, produce, and raw meat is exempt from sales tax in Indiana. However, prepared food — anything ready to eat, including deli items, hot food from a grocery store, and restaurant meals — is taxed at the full rate.
What is the sales tax in Indianapolis?
Marion County, which includes Indianapolis, has a combined sales tax rate of 7.25 percent (7 percent state plus 0.25 percent local). This rate applies to all taxable purchases in the county.
Do I pay sales tax on clothes in Indiana?
No. Clothing is exempt from sales tax in Indiana. This includes shirts, pants, dresses, coats, shoes, and similar items. Accessories like belts, scarves, and hats may be treated differently depending on how they are classified, so ask if you are unsure.
Is there sales tax on services like haircuts or repairs?
No. Services themselves are not taxed in Indiana. A haircut, plumbing repair, or car service is not subject to sales tax. However, if the service includes a product — like paint for a painting job — the product portion may be taxed depending on how the invoice is itemized.
How do I find out my exact sales tax rate?
Use the Indiana Department of Revenue's sales tax rate lookup tool on its website, or call 317-232-2240. You can also ask the retailer. You need your street address, city, and zip code to get an accurate rate, since local taxes vary by location.