Indiana offers a vibrant environment for business with over 537,000 small businesses, employing 44% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Indiana is crucial. This guide provides an overview of the various taxes small businesses in Indiana must navigate, including tax rates, filing requirements, and deadlines.
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Types of Business Taxes in Indiana
Business owners in Indiana may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
- Corporate Adjusted Gross Income Tax
- Applicable Entities: C corporations, S corporations, and entities with C corp elections
- Tax Rate: 4.9%
- Filing Requirements: File Form IT-20 for C corporations by the 15th day of the fifth month after the tax year or Form IT-20S for S corporations by the 15th day of the fourth month after the tax year.
- Estimated Payments: Required if annual unpaid liability is at least $2,500. Payments are due quarterly on April 20, June 20, Sept. 20, and Dec. 20.
- Pass-Through Entity (PTE) Tax
- Applicable Entities: Partnerships, S corporations, and LLCs taxed as an S corporation or partnership
- Tax Rate: 3.05%
- Filing Requirements: Schedule PTET must be filed by the 15th day of the fourth month following the close of the tax year.
- Estimated Payments: For 2024 only, file Form IT-6WTH online to make a single estimated payment of at least 50% of the tax liability by the end of the tax year (quarterly payments will be required after 2024).
- Sales and Use Tax
- Applicable Activities: Sales of goods and tangible personal property
- Tax Rate: 7%
- Filing Requirements: File ST-103 online monthly, quarterly, or annually based on sales volume.
- Withholding Tax
- Applicable Entities: Employers with employees
- Tax Rate: 3.05% (county income tax withholding also required)
- Filing Requirements: File Form WH-1 online annually, monthly, or early monthly based on withholding amounts, by the 30th day after the end of the period for annual or monthly filers or the 20th day after the period for early-monthly filers.
- Unemployment Insurance Tax
- Applicable Entities: Employers with employees
- Tax Rate: Varies based on business’s experience rating
- Wage Base: $9,500 per employee per year
- Filing Requirements: You must file quarterly reports online by April 30, July 31, October 31, and January 31.
- Personal Property Tax
- Applicable Entities: Businesses using personal property
- Tax Rate: Based on property type and value
- Filing Requirements: Report annually to the county assessor by May 15.
- Nonresident Withholding Tax
- Applicable Entities: Pass-through entities with nonresident members
- Tax Rate: 3.05% on distributive share income
- Filing Requirements: File Form IT-6WTH by the 15th day of the fourth month following the close of the tax year.
How to File and Pay Indiana Business Taxes
Business taxes in Indiana can be filed and paid through various methods:
- Online Filing and Payment: Use the Indiana Taxpayer Information Management Engine (INTIME) for electronic submissions and payments.
- Mail: Send forms and payments to the address indicated (where applicable).
Important Deadlines
Keep track of these key dates to avoid penalties:
- Corporate Adjusted Gross Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends for S corporations and the 15th day of the fifth month after the tax year for C corporations.
- Estimated Tax Payments: Due quarterly on April 20, June 20, September 20, and December 20.
- Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume.
- Withholding Tax Returns: Due annually, monthly, or early monthly based on withholding amounts, by the 30th day after the end of the period for annual or monthly filers or the 20th day after the period for early-monthly filers.
- Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.
Tax Credits and Incentives
Indiana offers several tax credits and incentives for small businesses, including:
- Patent Income Tax Exemption: This exemption is available to certain businesses in Indiana with no more than 500 employees for up to 10 years per qualified utility and plant patent. The total amount of exemptions claimed each year may not exceed $5 million.
- Hoosier Business Investment Tax Credit: This credit is available to eligible businesses for projects that create new jobs. It is a nonrefundable corporate income tax credit calculated as a percentage of the eligible capital investment to support the project.
- Headquarters Relocation Tax Credit: This credit is available to corporations that relocate their headquarters to Indiana. The Small Headquarters Relocation Tax Credit provides a refundable tax credit to a small, high-growth business that relocates its headquarters or 80% of its total payroll to Indiana.
- Research and Development Tax Credit: Available to eligible businesses for Indiana-qualified research expenses. The credit equals 15% of the qualified research expenses that exceed a base amount, up to $1 million. A credit of up to 10% is available for any excess of qualified research expenses over the base amount greater than $1 million. Indiana also offers a 100% sales tax exemption for qualified research and development equipment and property purchased.
Indiana’s business tax breakdown by business type
Business taxes can be complicated, so we’ve included a chart below that breaks down the taxes that different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
| Business type | Personal income tax | PTE tax | Corporate income tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through), if not making the PTE tax election | Yes, if it makes the election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Yes (pass-through), if not making the PTE tax election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through), if not making the PTE tax election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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Indiana Small Business Taxes: The Employer’s Complete 2023 Guide
Although Indiana may not be the most obvious state to set up shop, the Hoosier State’s business-friendly environment makes it worth a second look for entrepreneurs. According to Forbes Advisor, Indiana is the best state to start a business in 2023—in part due to its low cost of living, abundant business funding programs, and thriving workforce. Meanwhile, Indiana’s low tax rates helped it earn the ninth spot in the Tax Foundation’s 2023 list of most tax-friendly states in the US.
But before you start a new venture in Indiana, consider what taxes you’ll have to pay in the state. Keep reading to learn:
What kind of business taxes do you pay in Indiana?
Factors like business structure, employer status, and annual revenue help determine what business taxes you’re responsible for, so there’s no one answer to this question. However, most small business owners in Indiana can expect to pay income tax, franchise tax, sales tax, employer taxes, and any relevant industry-related or local taxes.
Indiana personal income tax
Sole proprietorships, partnerships, and limited liability companies (LLCs)—otherwise known as pass-through entities—pay business taxes through the owner’s personal income tax returns. In 2023, Indiana taxpayers are subject to a flat 3.15% income tax rate.
How to pay
Individual tax returns for the state are due by April 15—the same deadline established by the Internal Revenue Service (IRS) for federal individual tax returns.
Find individual tax forms Form IT-40 (for residents of the state) and Form IT-40PNR (for part-year residents and nonresidents) here.
Use the appropriate address listed in your tax form’s instructions to mail your tax return to Indiana’s Department of Revenue (DOR), along with your enclosed payment if applicable. If you prefer to pay your taxes online, you can do so through the Indiana Taxpayer Information Management Engine (or INTIME, for short).
In addition to each partner’s personal tax return, partnerships are required to file a separate return for the business itself (Form IT-65, found here) by the 15th day of the fourth month after the fiscal year ends. For those following the calendar year, this tax filing deadline falls on April 15.
Similar to the individual tax returns, you’ll need to find the appropriate mailing address in the partnership return instruction booklet. Then, mail your partnership tax payments along with the tax return, or pay online through INTIME.
Indiana corporate income tax
Corporations that are incorporated or do business in Indiana must file and pay corporate income taxes to the DOR. Indiana’s corporate tax rate for the 2023 tax year is 4.9%.
How to pay
The tax forms and instructions for both C corporations (Form IT-20) and S corporations (Form IT-20S) can be found here.
Indiana’s C corporation tax returns are due by the 15th day of the fifth month after the end of the fiscal year. This deadline falls on May 15 for calendar filers. C corporations can choose to file electronically or by mail using the appropriate address found in the Form IT-20 tax instructions. If your corporation makes over $1,000,000 in gross income during the fiscal year, you’ll need to file your return using certified Modernized e-File (MeF) software.
On the other hand, S corporations must file their tax returns by the 15th day of the fourth month after the fiscal year ends (April 15 for calendar year filers). Companies can file online or by mail (using the appropriate address from the Form IT-20S instructions).
All corporations that expect to pay over $2,500 in corporate taxes for the fiscal year are required to make quarterly estimated tax payments on April 20, June 20, September 20, and December 20.
You have the option here to pay any estimated taxes via INTIME or by mail. If you choose to pay by mail, make sure to send Forms E-6 and IT-6 along with your tax payment to the address below:
Indiana Department of Revenue
Tax Administration
100 N. Senate Ave.
Indianapolis, IN 46204-2253
However, those with quarterly tax payments of over $5,000 must file and pay their business income taxes through INTIME.
Sales tax
Companies selling physical goods or taxable services must collect sales tax from their customers at the point of purchase and pay it to the DOR. Indiana’s sales tax in 2023 is 7%, with no additional local sales taxes levied by the state’s municipalities.
How to pay
Before you can collect sales taxes, you must first apply for a Registered Retail Merchant Certificate (RRMC). Register your business online via INTIME or the INBiz website, or mail Form BT-1 (found here) to the address below:
Indiana Department of Revenue
Tax Administration Processing
PO Box 6197
Indianapolis, IN 46206-6197
When you receive your RRMC, the DOR will also let you know how often you’ll need to file and pay taxes. Most businesses follow a monthly filing schedule and can expect to file and pay taxes online via INTIME by the 20th of the month after the end of the company’s filing period. Note that you must still file a sales tax return even if you didn’t collect any taxes for the filing period.
For more information on Indiana’s sales tax, visit the DOR website.
Withholding tax
Indiana-based employers must withhold a portion of each employee’s wages and submit these withholding taxes to the state. The state withholding tax rate in 2023 is 3.15%.
How to pay
First, register your business online via INTIME or INBiz. Alternatively, you can use the same application form you used to register for a sales tax permit (Form BT-1).
After registering, employers are assigned a withholding filing frequency based on their withholding tax liability from the previous year. New employers are assigned a filing frequency based on their estimated monthly wages.
The due dates for each filing frequency are as follows:
- Annual: January 31 of the following year
- Quarterly: The last day of the month following the end of the quarter
- Monthly: 30 days after the end of the monthly filing period
- Early: 20 days after the end of the monthly filing period
No matter your filing frequency, all registered employers must file their monthly withholding tax returns (Form WH-1) via INTIME.
Annual withholding tax reconciliation forms (Form WH-3) must be filed through INTIME by January 31, even if you didn’t have any employees or pay any wages during the fiscal year.
For more details on Indiana’s withholding tax, visit the DOR website or read this guide on filing withholding taxes through INTIME. Additionally, you can find all withholding tax forms here.
Indiana unemployment tax
Indiana also requires employers to pay state unemployment insurance (UI) taxes to cover unemployment benefits for eligible former workers.
The state’s unemployment tax rate ranges from 0.5% to 7.4% on the first $9,500 of each employee’s wages. The tax rate for new employers is 2.5%. Note that the Indiana Department of Workforce Development (DWD) reassesses the tax rate for new employers after operating for 36 months.
How to pay
New employers must register their business through the DWD’s Employer Self-Service portal during the first month it reports employee wages. Employers will use this same website to file quarterly tax reports and make any tax payments. These quarterly filings are due April 30, July 31, October 31, and January 31.
To learn more about Indiana’s unemployment taxes, look over the DWD unemployment insurance employer handbook.
Other industry-related and local taxes
Depending on the area your business is located in, you may find yourself paying other taxes in addition to those imposed by the state.
For instance, some counties charge their own income tax, resulting in a combined state and local tax rate that ranges from 3.73% to 6.13%. Other municipalities may collect their own withholding or property taxes, or they might charge sales tax on certain items.
On top of that, the state of Indiana imposes taxes on some industries or businesses with certain offerings. So companies selling cigarettes and tobacco products must pay additional taxes, as do those that sell gasoline or rent motor vehicles. Other industry-specific taxes to look out for include the following:
- aircraft excise tax
- alcoholic beverage tax
- fireworks tax
- innkeeper’s tax
- riverboat wagering tax
To make sure you’re staying compliant with state and local tax regulations, speak with your accountant or tax advisor.
Indiana tax breakdown by business type
Let’s take a look at the various Indiana state and federal tax obligations by business entity type. Note that pass-through entities pay federal income taxes through their owner’s or member’s personal income tax returns.
| Business type | State income taxes | Sales tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC with C corp election | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| LLC | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Indiana small business taxes with Gusto
As you can see, state taxes are a big responsibility for small business owners in Indiana—and yet they’re just one piece of the puzzle that makes a successful business. But with the help of Gusto’s powerful HR and payroll software, you can stop stressing over taxes and dedicate more of your time to the tasks only you can do. Try our platform out for yourself and sign up for an account today.
