Cost of Doing Business

Business Tax Overview

Indiana is nationally recognized as a low tax state for business, ranking 10th nationally 1st in the Midwest in the Tax Foundation's 2020 Business Tax Climate Index. Our total state and local business tax burden as a percentage of Gross State Product is recognized as one of the lowest in the country. We have no gross receipts tax and no inventory tax.

Corporate Income Tax

Indiana's corporate income tax is reducing to 4.9% by 2021. 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.

Single-Sales Factor

To determine Indiana's share of an interstate or international corporation's taxable income, a company's adjusted gross income is apportioned based upon a single-sales factor with Indiana's portion based solely on the portion of the company's sales in Indiana. 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.

Sales & Use Tax Exceptions

Indiana's Sales and Use Tax is a tax is calculated at a rate of 7%. In manufacturing, the following are exempt from the sales tax: 

• Electricity
• Equipment
• Power
• Raw Materials
• 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.