Is the state file encrypted?

No, by default, the Terraform state file (terraform.tfstate) is not encrypted. It is stored in plain text and may contain sensitive data such as passwords, access keys, and secrets if not properly handled (for example, using sensitive = true in variables or specialized secret management tools). Encrypting the state file is typically achieved through the following approaches:

1. Using a backend that provides encryption at rest, such as S3 with server-side encryption (SSE), Azure Blob Storage with appropriate settings, or Google Cloud Storage.
2. Encrypting the file before storage using external tools (secret managers) and integrating this process into CI/CD pipelines.

It is important to use a secure backend for storing the state file to ensure confidentiality.