Indiana levies a flat tax of 3.4% on all taxpayers’ federal adjusted gross income.
Benefits paid by social security are not taxed by the state of Indiana.
Retirement Income and exemptions;
If you are above the age of 60 and receive a military pension you may exclude up to $5,000 from being taxed. If you receive a federal civil-service annuity and are over the age of 62 you may deduct $2,000 from your adjusted gross income. Any income earned though an out of state pension is fully taxed by the state of Indiana.
If you maintain a residence in Indiana from January 1st to December 31st you are considered a full time resident. You do not have to maintain a physical presence for the full year as long as your primary residence is in Indiana. Military personal who are on temporary stay from deployment are considered residents for the length of their leave. An example of this is traveling out of state for a few weeks each year where you return to your residence in Indiana, you are still considered a full time resident.
Indiana requires couples to maintain the same filing status for state taxes that they do for their federal filing, so if you happen to file jointly on your federal returns you must filing the same for your Indiana state return as well, if you file separate federal returns you must file separate Indiana returns.
