Indiana has no gross receipts tax and no inventory tax.
Corporate Income Tax
The Corporate Adjusted Gross Income Tax is calculated at a flat 8.5 percent of adjusted gross
income. Adjusted gross income is a companys 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.
Indiana is phasing in the single-sales factor for apportioning corporate income tax. Indiana had
determined its share of an interstate or international corporations taxable income by weighing
the Indiana portion of a companys 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 companys
sales in Indiana. This change is being phased in and will be complete by 2011.
Sales and Use Tax
Indianas Sales and Use Tax is one of the lowest in the Midwest. The tax is calculated at a rate of 6
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.
Real and personal property tax is assessed at 100 percent of market value. Tax rates and
exemptions vary among local jurisdictions.
Individual Income Tax
Indianas personal income tax is 3.4 percent of federal adjusted gross income (with certain
exemptions and deductions).