Does Indiana tax pensions and retirement income?
Taxed, with narrow exceptions
Yes, generally. Indiana's deductions for retirement income are narrow: up to $16,000 of a federal civil service annuity at 62 or older, and all military retirement income. We found no general exclusion for other pensions or IRA withdrawals in the department's list of deductions.
In the state's own words
Copied word for word from the official document linked below each quote:
“If you received a civil service pension (nonmilitary*) and are at least 62 years of age, then you may be eligible for up to a $16,000 deduction.”
“For 2022 and later, the deduction is equal to the entire amount of military retirement income and/or survivor’s benefits.”
And Social Security?
No. Indiana does not tax Social Security; any amount taxed on your federal return is deducted on the Indiana return. The Indiana Social Security page quotes the rule.
Federal tax still applies
Whatever Indiana does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) matter. Check with the Indiana Department of Revenue before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- DeductionsIndiana Department of Revenue. Read on November 12, 2026.