Does Indiana follow the federal no-tax-on-tips and overtime deductions?
CONFORMS (tax year 2026 only)
Indiana's position is split — by deduction, by tax year, or both. Read the per-deduction table and the state's own words below carefully before assuming either deduction applies to your state return. The federal deduction on Schedule 1-A is separate and unaffected.
Verified against the official state source below — last verified October 26, 2026
| Deduction | Indiana position |
|---|---|
| Federal tips deduction (IRC §224) | Conforms 2026 only |
| Federal overtime deduction (IRC §225) | Conforms 2026 only |
What the state itself says
"However, these deductions are in place only for the 2026 tax year."
- Official source
- Indiana Department of Revenue, Income Tax Information Bulletin #128, "Deductions for Tips, Overtime, and Vehicle Loan Interest" (June 2026)
- Tax years covered
- 2026 only; not available for 2025.
Indiana starts from federal AGI; the General Assembly enacted specific statutes in 2026 (IC 6-3-2-31, -32, -33, via Senate Enrolled Act 243) creating Indiana deductions tied to the federal Schedule 1-A amounts for TY2026 only; extension is a decision for the 2027 General Assembly.
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.