Indiana's statewide sales tax rate is 7 percent
Indiana charges a 7 percent sales tax on most retail purchases. This is the rate you pay statewide, and it applies to tangible goods — things you can touch and take home. Some counties and cities add their own local sales tax on top of the state rate, which can push your total to 7.5 percent or higher depending on where you shop.
The 7 percent rate has been in place since 2008. It is applied at the point of sale, meaning the tax is calculated and added to your bill when you check out, whether you are buying in a store or online from a seller registered to collect Indiana tax.
Key Takeaways
- Indiana's base sales tax is 7 percent on tangible goods, but your actual rate depends on your county and city because local taxes stack on top.
- Food for home consumption, prescription medications, and medical devices are exempt from sales tax in Indiana.
- Services — haircuts, repairs, consulting — are generally not taxed in Indiana, though some specific services like telecommunications are.
- Online purchases from out-of-state sellers are only taxed if that seller has a physical presence or economic nexus in Indiana.
- Local tax rates vary from zero to over 2 percent, so your total rate can range from 7 percent to more than 9 percent depending on your location.
Local sales tax adds to the state rate
Many Indiana counties and cities impose their own sales tax on top of the 7 percent state rate. These local rates are not uniform — some areas have no local tax at all, while others add 1 percent, 1.5 percent, or even higher. Your total sales tax is the sum of state plus local, so you might pay anywhere from 7 percent to over 9 percent depending on where you live and shop.
To find your exact local rate, check with your county assessor's office or the Indiana Department of Revenue website, which lists rates by county and municipality. If you shop in multiple counties — for instance, if you live near a border — the rate that applies is the one where the sale physically occurs, or where the seller is located for online orders.
What is exempt from Indiana sales tax
Indiana does not tax food for home consumption. This means groceries — bread, milk, vegetables, meat, canned goods — are not subject to sales tax when you buy them at a supermarket or grocery store. However, prepared food, restaurant meals, and food sold at convenience stores or gas stations is taxed.
Prescription medications and certain medical devices are also exempt. This includes insulin, inhalers, and devices prescribed by a doctor. Over-the-counter medications like aspirin or cold medicine are taxed, because they are not prescription items.
Services are generally not taxed in Indiana. A haircut, car repair, plumbing work, or accounting consultation is not subject to sales tax. However, some specific services — such as telecommunications, utilities in certain contexts, and transient lodging (hotel stays under 30 days) — do have tax applied, so the exemption is not absolute.
How online purchases are taxed
Online sellers must collect Indiana sales tax only if they have economic nexus in the state. This means they have a warehouse, office, employee, or other physical presence in Indiana, or they meet Indiana's sales threshold for remote sellers. As of 2024, most online retailers with significant sales volume are required to collect and remit Indiana tax on purchases shipped to Indiana addresses.
If an online seller does not collect Indiana tax at checkout, you may be responsible for paying use tax — a tax on purchases you bring into Indiana from out of state. Use tax is owed to Indiana but is rarely enforced for individual consumers. Most people do not report it, though technically it is due on untaxed online purchases.
Sales tax on vehicles and special items
Motor vehicles are subject to Indiana sales tax, but the calculation is different from regular purchases. The tax is based on the selling price of the vehicle, and you pay it when you register the vehicle with the Bureau of Motor Vehicles, not at the dealership. The rate is still 7 percent plus any local tax.
Gasoline and diesel fuel are taxed at a different rate than general sales tax — they have their own excise tax structure set by the state. This is separate from and in addition to sales tax, so the total tax on fuel is higher than 7 percent. Cigarettes and alcohol also have specific excise taxes that explore separately from sales tax.
How to verify the tax on your receipt
When you receive a receipt, the sales tax should be itemized separately from the subtotal. You can verify it by multiplying the subtotal by your local rate. For example, if you buy $100 in taxable items in a county with a 7.5 percent total rate, the tax should be $7.50, and your total should be $107.50.
If the tax seems wrong, check whether all items on your receipt are actually taxable. Groceries, for instance, should not have tax added. If a grocery item was taxed, ask the cashier or manager — it may be a scanning error. For online purchases, verify that the seller applied the correct rate for your shipping address, not their location.
Frequently Asked Questions
Is clothing taxed in Indiana?
Yes, clothing is subject to the full 7 percent state sales tax plus any local tax. Indiana does not have a clothing exemption, so shoes, shirts, and accessories are all taxed at the regular rate.
Do I pay sales tax on used items?
Sales tax applies to used goods sold by a business, such as a used car dealership or secondhand store. Private sales between individuals are not subject to sales tax, but if you sell through a business or platform that handles the transaction, tax may explore.
What is the difference between sales tax and use tax?
Sales tax is collected by the seller at the point of sale. Use tax is a tax you owe on items you purchase out of state and bring into Indiana, or on untaxed online purchases. It is the same rate as sales tax but is your responsibility to report and pay if the seller did not collect it.
Are digital products like e-books or software taxed?
Indiana's sales tax rules for digital products vary by type. Some digital downloads are taxed, while others are not. Software licenses and e-books may be treated differently depending on whether they are considered a service or a product. Check with the seller or the Indiana Department of Revenue for specifics on what you are buying.
Do I have to pay sales tax if I buy something for resale?
No. If you are a business buying inventory to resell, you can provide a resale certificate to the seller and avoid paying sales tax on that purchase. You will then collect sales tax from your customers instead. You need to register with the Indiana Department of Revenue to obtain a resale certificate.