IN
Indiana Small Business Tax Guide
Indiana's sales, income and corporate tax points for small businesses, each quoted from the Department of Revenue with the date checked. An educational overview, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Indiana before making filing or planning decisions.
Tax landscape for small businesses
In Indiana, a business that sells goods collects sales tax. In the words of the Indiana Department of Revenue (Indiana, checked October 31, 2026): "If your business sells goods or tangible personal property, you’ll need to register to collect a seven percent sales tax." Registration happens online: "You can register to collect sales tax and obtain a Registered Retail Merchant Certificate (RRMC) via InBiz."
For individual income tax, the Department (Indiana, checked October 31, 2026) says: "The Indiana Individual adjusted gross income tax rate for 2026 is 2.95% and will adjust in 2027 to 2.90%." It adds: "County income tax rates may be adjusted in January and October." Check the current county rate where you live and work. For corporations, the Department's rate history lists the adjusted gross income tax for general corporations at "4.90%" for "July 1, 2021 - Present".
Worked example (sample figures, not tax advice): following the Department's own example of a computer store (Indiana, checked October 31, 2026), a shop invoices a customer $800.00 for parts and $200.00 for repair labor. The Department's example says: "While she won’t collect sales tax on the repair service, she will be required to collect sales tax on the components she sells." At the seven percent rate quoted above, the sales tax on the parts is $800.00 × 7% = $56.00, and the invoice total is $800.00 + $200.00 + $56.00 = $1,056.00. Check with the Department whether a particular service is taxable before you rely on this treatment.
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Sales tax | "seven percent" (the Indiana Department of Revenue (Indiana, checked October 31, 2026)) | Applies when a business "sells goods or tangible personal property". Register through InBiz for a Registered Retail Merchant Certificate. On exemptions, the Department's sales and use tax refunds page (Indiana, checked November 1, 2026) says: "If the customer is registered as a retail merchant with the department, the customer may purchase items exempt from tax directly from the vendor." Customers who aren't registered "will pay tax to the vendor and may file for a refund directly with DOR." |
| Individual income tax | "2.95%" for 2026, "2.90%" in 2027 (Indiana Department of Revenue, checked October 31, 2026) | County income tax applies as well; the Department says county rates "may be adjusted in January and October". Ask the Department or a tax professional how it applies to your business income. |
| Corporate adjusted gross income tax | "4.90%" ("July 1, 2021 - Present"; Indiana Department of Revenue rate history, checked October 31, 2026) | For general corporations that are not financial institutions. |
Filing requirements
This list isn't a complete checklist for your business.
Register before you collect sales tax
According to the Indiana Department of Revenue (Indiana, checked October 31, 2026), "You can register to collect sales tax and obtain a Registered Retail Merchant Certificate (RRMC) via InBiz." For sellers outside Indiana, its remote sellers page (Indiana, checked November 1, 2026) says: "Sellers must get a registered retail merchant’s certificate and collect and remit applicable sales tax(es) if its gross revenue from sales into Indiana exceeds $100,000 in the previous or current calendar year." It adds: "Effective Jan. 1, 2024, Indiana only has the $100,000 threshold."
File every return, even with no activity
The Department (Indiana, checked October 31, 2026) says: "If you previously registered for withholding, sales, FAB, CIT or other trust taxes, you must still file a $0 returns even if there is no tax revenue or activity for that period." It also says: "Late filed returns are subject to a penalty of up to 20%, and a minimum penalty of $5."
Pay estimated tax during the year
On the federal side, the IRS's estimated taxes page (In the US (federal), last reviewed or updated September 25, 2026) says: "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed." For Indiana, the Department's penalty table (Indiana, checked October 31, 2026) lists "Underpayment of estimated tax: 10% of the underpayment for that period".
Deductions and write-offs
Confirm with your state how it treats each item.
- Half of self-employment tax: the IRS's self-employment tax page (In the US (federal), last reviewed or updated October 30, 2026) says: "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income."
- Self-employed health insurance: the same IRS page says: "Under Section 2042 of the Small Business Jobs Act, a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance."
- This page doesn't say whether Indiana adopts any federal deduction; check that with the Department of Revenue or a tax professional.
Practical tips
- List the sales tax separately from the price of the goods, so the customer sees both amounts.
- Keep parts and labor on separate invoice lines when only one of them is taxable.
- Look up your county's income tax rate each January and October, when the Department (Indiana, checked October 31, 2026) says it can change.
- Sort expenses as you go. Billed's expense tracking page says: "Give every expense a category so your spending is already sorted when you file taxes or hand the year to your accountant."
Frequently asked questions
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At a glance
| Tax | What the official source says |
|---|---|
| Sales tax | "seven percent" (Indiana Department of Revenue, checked October 31, 2026) |
| Individual income tax | "for 2026 is 2.95%" (Indiana Department of Revenue, checked October 31, 2026) |
| Corporate adjusted gross income tax | "4.90%" (Indiana Department of Revenue rate history, checked October 31, 2026) |
| Federal self-employment tax | "The self-employment tax rate is 15.3%." (IRS, In the US (federal), last reviewed or updated October 30, 2026) |
When this isn't for you
This page quotes Indiana and federal sources on general small-business taxes. It doesn't cover industry-specific taxes, payroll in detail or multi-state filing, and it isn't tax advice. For your own filings, contact the Indiana Department of Revenue or a tax professional.