The Indiana income tax rate is a flat 3.4% of personal income. The base taxable amount is equal to the adjusted gross income of the tax payer, as determined by their federal tax return. If several income tax deductions are applied, then the base taxable amount can be lowered. In 2008, for example, there was a $2,500 deduction for rent paid, and a deduction that equaled whatever amount of taxes may have been paid out of state.
In some Indiana counties, there is also a county income tax that goes to government funding. The highest county rate is at 1%, and is paid in addition to the state income tax. The county board of commissioners are the ones who decide what the rate will be, which they then submit to the Department of Revenue. The Department forwards the request to the state legislators, and the rate must then be approved by the Indiana General Assembly.
Income taxes are paid by April 15 annually or the next business day if the 15th falls on a weekend. In 2008, the income tax revenue collected by the state added up to $4.68 billion.
As for Indiana State Sales Tax, the sales tax rate is 7% on most transactions. The state’s city governments are also allowed to impose their own sales taxes. There are certain exceptions to the sales tax, which are mainly food and drugs.
You are required to file your tax return by April 15th unless you file an extension to allow for more time. An extension allows you more time you get your paperwork together to file your return. It does not give you more time to pay. If you pay late then you could face interest and penalties. You can file your tax return either online by e-filing your return or by mailing your return in.