Indiana's statewide sales tax is 7 percent, but your actual rate depends on where you buy and what you buy

Indiana has a base sales tax of 7 percent that applies statewide. However, many counties and cities add their own local tax on top of that rate. Your total sales tax can range from 7 percent to as high as 8.7 percent depending on your location within the state. The rate you pay is determined by the address where the sale takes place, not where you live.

Some products are taxed at a lower rate or not taxed at all. Groceries, prescription medications, and certain medical devices are exempt or taxed differently. If you buy the same item in different counties, you may pay different amounts in tax even though the product price is identical.

Key Takeaways

  • Indiana's base sales tax rate is 7 percent, but local county and city taxes can raise your total to 7 percent or higher.
  • Groceries and prescription medications are not subject to Indiana sales tax, but prepared food and over-the-counter drugs are taxed normally.
  • Your sales tax rate is based on the location where you make the purchase, not your home address or where you live.
  • Marion County (Indianapolis) charges 7.25 percent total; Lake County (Gary) charges 8.7 percent; rates vary significantly across the state.

How local taxes stack on top of the state rate

Indiana allows counties and cities to add their own sales tax on top of the 7 percent state rate. These local taxes fund schools, transportation, and other services. A county might add 0.25 percent, and a city within that county might add another 0.5 percent, bringing your total to 7.75 percent.

The local rate structure varies widely. Some counties have no additional local tax and stay at the state minimum of 7 percent. Others have added multiple layers of local tax over time. Lake County, which includes Gary, has one of the highest combined rates in the state at 8.7 percent. Marion County (Indianapolis) sits at 7.25 percent.

When you shop online or by phone, the tax rate applied depends on where the seller ships the item. If you order from a retailer outside Indiana and have it shipped to your Indiana address, Indiana sales tax applies based on your delivery location.

What products are taxed differently or not at all

Groceries are not subject to Indiana sales tax. This includes bread, milk, vegetables, meat, and other food items you buy at a supermarket to prepare at home. However, prepared food—items from a deli counter, restaurant, or food truck—is taxed at the full rate.

Prescription medications are exempt from sales tax. Over-the-counter drugs like aspirin, cold medicine, and allergy pills are taxed normally. Medical devices prescribed by a doctor may be exempt, but this depends on the specific device and how it is classified.

Clothing and shoes have no special exemption in Indiana and are taxed at your local rate. Some states exempt clothing, but Indiana does not. Diapers, feminine hygiene products, and other personal care items are also taxed normally.

Finding your specific county and city rate

To find your exact sales tax rate, you need to know your county and city. The Indiana Department of Revenue publishes a complete list of all county and local tax rates on its website. You can search by county name or city name to find the combined rate that applies to your location.

If you live near a county border, pay attention to where you are making the purchase. A store just across the county line may have a different tax rate. The rate that applies is always the rate where the store is located, not where you live.

Some major Indiana cities and their approximate combined rates include: Indianapolis (Marion County) at 7.25 percent, Fort Wayne (Allen County) at 7 percent, Evansville (Vanderburgh County) at 7.5 percent, and South Bend (St. Joseph County) at 7.5 percent. These rates can change when local governments add or modify taxes, so check the Department of Revenue website for the most current information.

How sales tax appears on your receipt

On a store receipt, the sales tax is usually shown as a separate line item at the bottom. The receipt will show the subtotal (the price before tax), the tax amount, and the total you owe. The tax amount is calculated by multiplying the subtotal by your local tax rate.

If you buy multiple items at different tax rates—for example, groceries (no tax) and a magazine (taxed)—the receipt will show tax only on the taxable items. Some retailers break this down by line item; others calculate it once at the end. Either way, the total tax you pay should match your local rate applied to the taxable purchases.

When you might not pay sales tax

Resellers and businesses can purchase items without paying sales tax if they have a resale certificate. This allows them to buy inventory tax-free and collect tax from their customers instead. You cannot use a resale certificate for personal purchases.

Some nonprofit organizations and government agencies are exempt from sales tax on certain purchases. If you work for a school, city, or registered nonprofit, you may be able to make tax-free purchases, but you will need to provide documentation of your status at the time of purchase.

If you return an item and receive a refund, the sales tax you paid is also refunded. Keep your receipt if you think you might return something, because the store will need it to process the refund correctly.

Frequently Asked Questions

Does Indiana tax groceries?

No. Unprepared food you buy at a grocery store—bread, milk, vegetables, meat, eggs—is not taxed. Prepared food from a deli, restaurant, or food truck is taxed at your full local rate.

What is the sales tax in Indianapolis?

Marion County (which includes Indianapolis) has a combined sales tax rate of 7.25 percent. This is the state rate of 7 percent plus a 0.25 percent local addition.

Do I pay sales tax on clothes in Indiana?

Yes. Indiana does not exempt clothing or shoes from sales tax. You pay your full local rate on all apparel purchases.

Is prescription medicine taxed in Indiana?

No. Prescription medications are exempt from sales tax. Over-the-counter medications like pain relievers and cold medicine are taxed normally.

What if I buy something online and have it shipped to Indiana?

Sales tax is based on the delivery address. If you order from any retailer and have it shipped to an Indiana address, Indiana sales tax applies based on your delivery location's rate.