To measure salinity in solutions, many applications make use of inductive sensors. Compared to electrode-based conductive sensors, inductive sensors are less prone to biofouling and polarization. Although inductive sensors are well suited for long time operations, distributed monitoring applications, such as low-cost sensor drifter, suffer under high costs. Industrial standard for inductive sensors is the transformer type sensor. An alternative approach is a design based on the eddy current effect, which is different by using magnetic flux through the water. However, the research presented until now is mostly of empirical nature. This paper presents a new theoretical description for inductive eddy current sensors. The fundamental functionality is based on Maxwell’s equations and allows an equivalent electrical RLC-circuit representation. The derived model proves that rather than a changing permeability of the fluid, the damping effect by the eddy currents determines the behavior of the sensor. For model validation, magnetic FEM-Simulations and practical experiments with prototypes were conducted. The results confirmed the modeling approach. With the aim to provide fundamentals for future development of more cost-efficient and smaller sensors, this paper gives a better understanding of the physical effects of this sensor type.