Indiana ranks 1st in the Midwest and 8th nationally in the Tax Foundation’s 2017 State Business Tax Climate Index (Sept 2016). In 2012, Indiana became the 23rd state in the nation and the first state in the industrial Midwest to pass Right-to-Work legislation.
|Tax Structure||Local Rate||State Rate||Notes|
|Real Property Tax||Local Rate or 3% Cap||0%||100% of Assessed Value*|
|Personal Property Tax||Local Rate or 3% Cap||100% of Assessed Value*|
|Machine & Equipment Tax||Local Rate or 3% Cap||100% of Assessed Value*|
|Corporate Income Tax||0%||5.75%||Reducing to 4.9% by 7/2021**|
|Individual Personal Income Tax||1.75%||3.23%||Federal Adjusted Gross Income (certain exemptions and deductions may apply)|
|Sales and Use Tax||0%||7%||Exemptions available for:
Raw Materials, Wholesale items used directly in production, Sales made in interstate commerce, and Research & Development Equipment
|Sales Tax –Electricity||0%||7%||May be eligible for Exemption|
|Sales Tax –Natural Gas||0%||7%||May be eligible for Exemption|
|Sales Tax –Water||0%||7%||May be eligible for Exemption|
|Sales Tax -Wastewater||0%||7%||No Exemptions available|
|Local Occupation Tax||0%||0%|
|Gross Receipt Tax||0%||0%|
The property tax rate in Indiana is capped at 1% for homesteads, 2% for other residential property and farmland, and 3% for commercial, industrial and personal property. This means while the actual rates may be higher, the maximum paid after deductions is capped. Some properties have a tax rate that is lower than the 3% cap and thus the lower rate would be used. Indiana’s property tax is assessed at 100% of market value.
**Corporate Income Tax
The Corporate Adjusted Gross Income Tax is calculated based on the adjusted gross income, which 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. It is not federal tax deductible and accelerate and bonus depreciation is allowed.
Indiana was ranked 10th in the nation by the Tax Foundation in the 2017 State Business Tax Climate Index Ranking for Unemployment Insurance Tax.
Minimum to Maximum – 0.505% to 7.474%
Wage Base – $9,500
Indiana‘s Premium Rate is $1.06 per $100 of payroll, which is the second lowest in the nation.
FICA (Social Security) – 6.2% (6.2% on the first $128,000 wages paid
Medicare – 1.45% or 2.35% (1.45% on the first $200,000 and 2.35% above $200,000)