Indiana vs Ohio Taxes
Compare the total tax burden between Indiana (2.95% flat) and Ohio (0% – 2.75%). Enter your income to see which state saves you more.
| Tax Component | Indiana | Ohio |
|---|---|---|
| Federal tax | $13,170 | $13,170 |
| State tax | $2,921 | $2,313 |
| FICA | $7,650 | $7,650 |
| Total tax | $23,741 | $23,133 |
| Take-home | $76,260 | $76,867 |
| Effective rate | 23.74% | 23.13% |
| Annual Difference | $607 more | $607 less |
The $607 difference is primarily because Indiana has a flat 3.0% income tax, while Ohio has a progressive income tax with rates up to 3.1%. At your income level, Indiana's marginal rate is 2.9% vs Ohio's 2.8%.
Why the difference
You'd save $607/year ($51/month) in Ohio vs Indiana.
Tax structure
Indiana has a flat 3.0% state income tax, while Ohio uses progressive brackets up to 3.1%.
Effective rate at your income
At $100,000, Ohio's effective state rate is 2.3% vs 2.9% in Indiana — a 0.6 percentage point gap.
Ohio local taxes
Most Ohio cities levy a municipal income tax (typically 1%-3%) on top of state tax.
Tip: With a flat tax rate, your effective state rate is predictable and consistent. Focus tax reduction on pre-tax contributions (401k, HSA) and any state-specific deductions or credits available.
Tip: Ohio's exemption of the first $26,050 of income means very low effective state rates for modest earners. However, municipal income taxes (Cleveland and Columbus, for example) can add significantly — these are separate from state tax.
Indiana Total Tax
23.74% effective rate
Ohio Total Tax
23.13% effective rate
Annual savings
by living in Ohio
Indiana vs Ohio: How Ohio's hidden city income taxes make Indiana the Midwest's quiet tax winner
Indiana and Ohio are Rust Belt neighbors with seemingly similar economic profiles—manufacturing heritage, affordable housing, moderate costs of living. But their tax structures diverge significantly, primarily because of Ohio's unusual reliance on municipal income taxes. Ohio's state rate is now $332 plus a flat 2.75% of income above $26,050 (2026, after HB96 collapsed the prior 0%/2.75%/3.125% brackets into one flat rate), but most Ohio cities and villages levy their own income taxes of 1% to 3% on top. Columbus charges 2.5%, Cleveland 2.5%, Cincinnati 1.8%. Indiana has no local income taxes in that sense—its county taxes (0.5-2.86%) are collected through the state system and are generally lower.
Indiana's flat 2.95% state income tax rate (2026, down from 3.0% in 2025) is one of the simplest in the country: a single rate, applied to adjusted gross income with a $1,000 personal exemption. Add an average county tax of about 1.5%, and the effective combined rate is roughly 4.45% for a typical Indiana resident. In Ohio, a worker in Columbus faces a 2.75% state marginal rate above the exemption plus 2.5% city tax—a combined marginal rate of about 5.25%.
Property taxes also favor Indiana modestly: 0.76% effective rate versus Ohio's 1.36%. On a $300,000 home, that's $1,800 per year in Indiana's favor. The migration between these states is modest—about 25,000 people per year in each direction—but the net flow has slightly favored Indiana in recent years, particularly in the Indianapolis metro area, which has attracted logistics, tech, and pharmaceutical companies.
Key Differences Beyond Income Tax
| Category | Indiana | Ohio |
|---|---|---|
| Local Income Tax | County income taxes of 0.5%-2.86% collected through state system; no city income taxes | Municipal income taxes of 1%-3% in most cities; complex credits between work and residence cities; state has no role in collection |
| Property Tax | Effective rate ~0.76%; property tax bills are limited by a statewide cap set as a share of assessed value | Effective rate ~1.36%; no constitutional cap; rates vary widely by school district and levy approvals |
| Sales Tax | Flat 7% statewide; no local additions; one of the highest state sales tax rates but predictable | Base rate 5.75%, combined up to 8.75% with county additions; lower on average than Indiana |
| Retirement Income | Social Security fully exempt; military pensions fully exempt; other retirement income taxed at 2.95% plus county tax | Social Security fully exempt; retirement income credit up to $200; city income taxes apply to earned income, not pensions |
| Business Taxes | Corporate income tax 4.9%; no gross receipts tax; low franchise taxes; pro-business reputation | No corporate income tax, but Commercial Activity Tax (CAT) of 0.26% on gross receipts above $1M; municipal net profit taxes also apply |
Who Benefits from Moving?
Workers in Columbus or Cleveland metro areas
A worker (single filer) earning $120,000 in Columbus pays about $2,863 in Ohio state tax (2026 rates, using Ohio's own federal-AGI-minus-exemption base) plus $3,000 in city income tax (2.5% of wages), totaling $5,863. An equivalent worker in Indianapolis pays about $3,511 state tax plus roughly $2,404 in county tax (Marion County at 2.02%), totaling $5,915. Ohio comes out about $52 ahead, since Ohio's 2026 flat-rate cut narrowed the gap versus prior years.
Homebuyers comparing similar metros
On a $300,000 home, Indiana property taxes run about $2,280 versus Ohio's $4,080. That $1,800 annual difference is the single biggest tax advantage of choosing Indianapolis over Columbus or Cincinnati. Over 30 years, that's about $54,000 in savings.
Retirees comparing affordable Midwest options
Ohio city income taxes apply to earned income, not pensions, so an Ohio retiree pays state tax only: about $1,482 on $70,000 of pension income (single filer, 2026 rates, before the retirement income credit of up to $200). In Indiana the same pension is taxed at the flat 2.95% plus county tax, about $3,071 with a typical 1.5% county rate after the $1,000 exemption. For pension income, Ohio is the cheaper of the two.
Bottom line: At $150,000 income (single filer), an Indianapolis resident pays about $7,406 in combined state and county taxes (Marion County), while a Columbus, OH resident pays roughly $7,438 in combined state and city taxes (2026 rates)—a gap of about $32 that widens to roughly $1,832 when you factor in Ohio's higher property taxes on a $300,000 home.
Tax at Different Income Levels
| Income | Indiana Total Tax | Ohio Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $15,591 | $15,027 | Save $564 |
| $100,000 | $23,741 | $23,133 | Save $607 |
| $150,000 | $40,605 | $39,897 | Save $707 |
| $200,000 | $56,944 | $56,136 | Save $807 |
Based on single filer, standard deduction, 2026 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $607/year ($51/month) in Ohio vs Indiana.
Tax structure
Indiana has a flat 3.0% state income tax, while Ohio uses progressive brackets up to 3.1%.
Effective rate at your income
At $100,000, Ohio's effective state rate is 2.3% vs 2.9% in Indiana — a 0.6 percentage point gap.
Ohio local taxes
Most Ohio cities levy a municipal income tax (typically 1%-3%) on top of state tax.
Tip: With a flat tax rate, your effective state rate is predictable and consistent. Focus tax reduction on pre-tax contributions (401k, HSA) and any state-specific deductions or credits available.
Tip: Ohio's exemption of the first $26,050 of income means very low effective state rates for modest earners. However, municipal income taxes (Cleveland and Columbus, for example) can add significantly — these are separate from state tax.
Understanding Each State
Indiana
This state uses a flat income tax rate, meaning the same percentage applies to all taxable income regardless of how much you earn. This simplifies tax planning but means there is no bracket benefit for lower earners. The effective rate is very close to the headline rate after deductions.
Tip: With a flat tax rate, your effective state rate is predictable and consistent. Focus tax reduction on pre-tax contributions (401k, HSA) and any state-specific deductions or credits available.
Ohio
Ohio has been flattening its income tax over several years: income under $26,050 is exempt, and income above it is taxed at up to 2.75% for 2026. Some Ohio cities levy their own municipal income tax on top of this (typically 1%-3%).
Tip: Ohio's exemption of the first $26,050 of income means very low effective state rates for modest earners. However, municipal income taxes (Cleveland and Columbus, for example) can add significantly — these are separate from state tax.
Key Comparison Points
Income tax structure: Indiana has a flat income tax (2.95% flat), while Ohio has a progressive income tax (0% – 2.75%).
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA, the 2026 federal SALT cap is $40,400, phasing out above $505,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in Indiana or Ohio?
Based on income tax alone, Ohio has a lower tax burden. At $100K income, you'd save $607 annually in Ohio compared to Indiana. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from Indiana to Ohio?
A single filer earning $100,000 would save approximately $607 per year in total taxes by living in Ohio instead of Indiana. At $150,000 income, the savings change to $707 per year.
What is the income tax rate in Indiana?
Indiana has a flat income tax with rates of 2.95% flat.
What is the income tax rate in Ohio?
Ohio has a progressive income tax with rates of 0% – 2.75%.