Does an iTunes backup include the Notes and Contacts that are on my iphone

Short Answer: Yes, if you back up your iPhone in iTunes, it shall backup Contacts and Notes.

Long Answer: On this Apple Page: About backups for iPhone, iPad, and iPod touch, it is mentioned under Backups from your computer

and I quote:

A backup from a computer doesn't include:

• Content from the iTunes and App Stores, or PDFs downloaded directly to Apple Books
• Content synced from Finder or iTunes, like imported MP3s or CDs, videos, books, and photos
• Data already stored in iCloud, like iCloud Photos, iMessages, and text (SMS) and multimedia (MMS) messages
• Face ID or Touch ID settings
• Apple Pay information and settings
• Apple Mail data
• Activity, Health, and Keychain data (to back up this content, you'll need to use Encrypted Backup in iTunes.)

So, Notes and Contacts will be backed up.

Side note: if you are paranoid about security, and have others using iTunes, then do an Encrypted Backup on iTunes.

Since I said “no” and Siabh said “yes”, here’s how to resolve the difference:

The answer depends completely on where the contacts and notes are housed, which you have not told us.

If, for example, they’re housed in iCloud, they are not backed up in iTunes.

No.

About backups for iPhone, iPad, and iPod touch - Apple Support