Indiana has one of the lightest tax burdens in the United States. Click here to compare the cost of doing business in other Midwestern states.
Indiana State Taxes
Excluded Taxes in Indiana
- Gross Receipts Tax
- Inventory Tax
- Inheritance Tax
Corporate Income Tax
The corporate Adjusted Gross Income Tax is calculated at a flat 7 percent of adjusted gross income. 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. The rate is being reduced on a scheduled decline until it reaches 4.9% in July 2021.
Indiana is phasing in the single-sales factor for apportioning corporate income tax. Indiana had determined its share of an interstate or international corporation’s taxable income by weighing the Indiana portion of a company’s property and the proportion of its employees in Indiana. The single-sales factor will calculate the Indiana portion based solely on the portion of a company’s sales in Indiana.
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.
Individual Income Tax
Indiana’s personal income tax is 3.4 percent of federal adjusted gross income (with certain exemptions and deductions) and is scheduled to decrease from the current rate of 3.4% to 3.3% for 2015 and 2016 and 3.23% for 2017 and beyond.
Patent Income Exemption
Taxpayers are exempt from certain income derived from qualified utility and plant patents. Qualified taxpayers are eligible for an exemption of 50 percent of patent income for each of the first five years. The exemption percentage decreases over the next five years to 10 percent in the tenth year. The total amount of exemptions claimed by a taxpayer may not exceed $5 million per year. This benefit is available only to companies with 500 or fewer employees.
Feel free to visit the Indiana Economic Development Corporations website at www.iedc.in.gov for more information.
Real and personal property tax is assessed at 100 percent of market value. Tax rates and exemptions vary among local jurisdictions, with key areas averaging 2.8734 percent tax-rate.
Key Jurisdictional Tax Rates for 2014, Payable 2015
|County ID #||State ID #||Tax District||
|04||05||Center Township – Sanitary||
|19||16||Cambridge City Town||3.4846|
|29||30||Richmond City – Wayne Twp.||
|32||34||Richmond City – Webster Twp.||
|34||06||Richmond City – Center||3.9908|
Visit the Wayne County, IN Government page for a complete list of all districts and rates.
County Adjusted Gross Income Tax (CAGIT)
The CAGIT takes 1% of adjusted gross personal income (not imposed on corporations), deducted by employer, collected by state and reimbursed to county.
County Economic Development Income Tax (CEDIT)
CEDIT takes 0.25% of adjusted gross personal income which is used for economic development projects in Wayne County.