Indiana is nationally recognized as a low tax state for business. Our total state and local business tax burden as a percentage of Gross State Product is recognized as one of the lowest in the country. We have no gross receipts tax and no inventory tax. We have also capped business property taxes at 3 percent of assessed value. Indiana has been ranked as having the best business tax climate in the industrial Midwest for the past seven years by the Tax Foundation.
Indiana has no gross receipts tax and no inventory tax.
Corporate Income Tax
The Corporate Adjusted Gross Income. New legislation will decrease Indiana’s corporate income tax from 8.0% to 6.5%, a reduction of nearly 25%. The tax rate will drop by 0.5% per year until 2015 as the decrease is phased-in. Adjusted gross income is a company’s federal adjusted gross income with certain adjustments. This method of determination simplifies tax calculations for corporations and does not apply to S corporations and not-for-profit organizations.
To determine Indiana's share of an interstate or international corporation's taxable income, a company's adjusted gross income is apportioned based upon a single-sales factor with Indiana's portion based solely on the portion of the company's sales in Indiana. Adjusted gross income is a company's federal adjusted gross income with certain adjustments. This method of determination simplifies tax calculations for corporations and does not apply to S Corporations and not-for-profit organizations.
Sales and Use Tax
Indiana’s Sales and Use Tax is tax is calculated at a rate of 7 percent. In manufacturing, the following are exempt from the sales tax: raw materials, equipment, power, electricity, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. In addition, the purchase of research and development equipment is exempt from the tax.
Real and personal property tax is assessed at 100 percent of market value. Tax rates and exemptions vary among local jurisdictions.
Individual Income Tax
Indiana’s personal income tax is 3.4 percent of federal adjusted gross income (with certain exemptions and deductions).
Indiana Business Taxes