The Tax Foundation ranks Indiana’s Business Tax Climate #1 in the Midwest and #8 in the USA.  This pro-business climate is secure – today and tomorrow – due to Indiana’s sound fiscal policies which have earned the State triple-A credit ratings from all three agencies (S&P, Fitch, and Moody’s).

 

Corporate Income Tax Reduction
Indiana’s corporate income tax rate is 6.25%. It will be reduced to 4.9% by 2021.

The State of Indiana offers incentives that may reduce the corporate income tax for eligible projects.  Click here and scroll to the State of Indiana section.

 

Property Tax

Real estate and personal property (equipment) are assessed at 100% of market value. Tax rates are capped at 3% for business property pursuant to state law.

Blackford County offers tax abatements that may reduce the real and personal property taxes for eligible projects.  Click here and view Tax Abatement.

 

Single Sales Factor
Indiana is a single-factor apportionment state. For corporations with income from within and outside Indiana, corporate income tax is based solely on Indiana sales.

 

Personal Income Tax Reduction
As of January 1, 2017, Indiana’s state personal income tax rate is 3.23%.

 

Inventory Tax
There is no inventory tax in the state of Indiana.

 

Sales Tax
Indiana’s sales tax is calculated at a rate of 7%.

 

Sales Tax Exemption

The state of Indiana allows sales tax exemptions for the following:

Manufacturing
The following are exempt from the sales tax:  raw materials, equipment, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. To the extent that computer hardware will be used directly in the production of another product, its purchase is exempt from tax pursuant to the manufacturing exemption.  To claim the exemption, the purchaser must show that the computer has an immediate effect on the article being produced as the result of being an essential and integral part of the production process.  With respect to computers, this is known as computer-assisted manufacturing (CAM).

Logistics
For companies engaged in public transportation, the following qualifies for sales tax exemption:  vehicles used to escort vehicles used in public transportation; items used to disassemble, load and secure the customer’s machinery for movement in public transportation; items used in planning transportation routes and obtaining travel permits.

Research and Development
The exemption for research and development equipment applies only to equipment purchased for the purpose of research and development activities.  Research and development activities include any activities devoted directly to experimental or laboratory research and development for new products, new uses of existing products, or improving or testing existing products.

Patent Income
Certain income derived from qualified patents and earned by a taxpayer are exempt from taxation.  The Tax Exemption for Patent-derived Income defines qualified patents to include only utility patents and plant patents.  The total amount of exemptions claimed by a taxpayer in a taxable year may not exceed $5 million.