Tax Structure

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
Franchise Tax 0% 0%
Local Occupation Tax 0% 0%
Inventory Tax 0% 0%
Gross Receipt Tax 0% 0%

 

*Property Tax

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.

 

Unemployment Insurance

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

 

Workers’ Compensation

Indiana‘s Premium Rate is $1.06 per $100 of payroll, which is the second lowest in the nation.

 

Payroll Taxes

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)