Updated September 4, 2026. Quick answer: Mostly yes. Indiana taxes public and private pensions and IRA/401(k) distributions the same as ordinary income, with one carve-out: a Civil Service Annuity Deduction of up to $16,000 for federal civil-service annuitants age 62+, reduced by Social Security received. Military retirement pay is fully exempt.
Federal civil service pensions in Indiana: does Indiana tax federal pensions.
More state retirement-income schedules, line by line: Indiana Schedule 2 retirement deductions.
More on public pension systems, topic by topic: Indiana 1977 Fund DROP, Indiana 1977 Fund reemployment and Indiana 1977 Fund COLA.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Indiana tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Indiana tax 403(b) and 457(b) withdrawals.
The 1977 police and firefighters fund, with its rules from its own handbook: Indiana 1977 Fund retirement decisions.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Indiana tax withholding on pension payments.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Indiana a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Indiana tax the profit from selling your home?.
The state’s income tax schedule: the Indiana tax brackets for 2026.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Indiana tax withholding on IRA and 401(k) withdrawals.
A pension earned in another state, or paid after a move, is covered here: does Indiana tax out-of-state pensions.
Trusts have their own page: does Indiana tax trust income.
Dividends and interest have their own page: does Indiana tax dividends and interest.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Indiana have an inheritance tax?.
Annuity payments have their own page: does Indiana tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Indiana have an estate tax?.
Military retired pay has its own page: does Indiana tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Indiana 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Indiana tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Indiana tax 401(k) and IRA withdrawals.
More on Indiana: Is a Living Trust Worth It in Indiana? and Indiana LLC Annual Report.
Related state retirement tax guides: Does Indiana Tax Social Security?
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Indiana taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Fully taxable, following federal adjusted gross income, with no general public-pension subtraction. |
|---|---|
| Private (employer) pensions | Fully taxable, same treatment as public pensions; no line in the state’s deduction schedule covers private pensions. |
| Federal government pensions (FERS/CSRS) | Partially exempt via the Civil Service Annuity Deduction: up to $16,000 per annuitant (age 62+, or a surviving spouse at any age), reduced dollar-for-dollar by Social Security and Railroad Retirement income received. |
| Military retirement pay | Fully exempt for 2022 and later (phased from 25% in 2019 to 100% in 2022); active-duty military wages, a separate and newer provision, became fully exempt starting 2024. |
| IRA and 401(k)/403(b) distributions | Fully taxable, following federal adjusted gross income, with no exclusion. |
| General retirement-income exclusion | An additional $1,000 exemption for age 65+ or blindness regardless of income, plus an additional $500 if federal AGI is under $40,000 (under $20,000 for married filing separately). |
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Social Security is never taxed by Indiana. Social Security has its own rules in every state; see the full breakdown in how Indiana taxes retirement income generally.
Figures verified against the Indiana Department of Revenue 2025 IT-40 booklet and Income Tax Information Bulletin #6 (June 2025) on September 30, 2026.
Statute and sources
Governing citation: IC 6-3-2-3.7 (civil service annuity), IC 6-3-2-4 (military retirement).
- Indiana Dept. of Revenue, 2025 IT-40 Booklet
- Indiana Dept. of Revenue, Income Tax Information Bulletin #6
Read September 4, 2026.
Related: how Indiana taxes retirement income generally · does Indiana tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.