This paper addresses the effect of target plasma electrons on the charge state of energetic ions, penetrating a target composed of bound as well as plasma electrons. Dynamic screening of the projectile Coulomb potential by the plasma electrons brings about a depression in the ionization energy of the ionic projectiles, as has been verified experimentally. This in turn makes the ionization cross-sections larger, while making the recombination cross-section smaller, thereby causing an increase in the ion charge state compared to the case of a gas target. The effect of the plasma environment, where the valence electrons are treated as plasma, is illustrated here for a 2 MeV carbon beam penetrating amorphous carbon targets of varying densities.