Indiana
Taxes and business formation • USA 2025–2026
LLC in Indiana
Corporation in Indiana
Tax system of Indiana
Income Tax
Indiana levies a flat personal income tax on individuals. The rate for 2025 is 3.05%, with a gradual reduction to 2.9% planned by 2027. In addition, each county levies a local income tax (County Income Tax), with rates ranging from 1% to 3.4% depending on the taxpayer's place of residence. The tax applies to all types of income.
Sales Tax
Indiana's base sales tax rate is 7% and is uniform throughout the state, with no additional local surcharges. The sales tax applies to most goods and certain services, including equipment rentals, digital products, and repairs. Groceries, prescription drugs, certain medical items, and manufacturing equipment are exempt. Determining the taxable base and the correct sales tax rate requires knowledge of state law and an understanding of the specifics of each business. Our firm provides services for obtaining a Sales Tax Certificate and for preparing and filing the Sales and Use Tax Return. We advise business owners on registration, calculation, and reporting.
Property Tax
In Indiana, property tax is regulated at the county and local municipal level. The average effective rate is about 0.85% of assessed value. Rates can vary significantly depending on the region and the intended use of the property. Indiana applies caps on tax growth for owners of a primary residence (homestead), farmland, and rental properties.
Business Taxes
C-corporations are subject to income tax at a rate of 4.9% in 2025. The tax base is determined as federal Adjusted Gross Income (AGI) with certain modifications. LLCs, corporations, and partnerships are required to file a Business Entity Report with the Indiana Secretary of State. The filing deadline is every two years, by the end of the month in which the company was registered.
Excise Taxes
Indiana levies excise taxes on the following categories: fuel (gasoline, diesel), alcohol, tobacco products, gaming machines, and so on. Some excise taxes depend on the location of sale and the category of consumer.
Favorable Tax Conditions
Indiana is recognized as one of the most business-friendly states in the Midwest thanks to: • Its low flat personal income tax rate, • A uniform sales tax with no local surcharges, • Simple reporting and registration requirements, • The absence of estate and gift taxes, • A moderate property tax with protections for primary residences.
Compared to Other States
Compared to Illinois, Michigan, and Ohio, Indiana offers a lower overall tax burden and a more predictable reporting system. The absence of a gross receipts tax makes the state attractive for high-volume, low-margin companies, while the relatively low property tax, simple company registration, and accessible infrastructure support the growth of small and medium-sized businesses.
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