Indiana Business Taxes at a Glance
Indiana's state income tax is a single low rate, and it has continued to fall, including a reduction for 2026. But every Indiana county also levies its own income tax, and which county applies depends on where you lived or worked on January 1. Indiana's sales tax is a single statewide rate, but many communities add food and beverage and lodging taxes. BOMCAS helps Indiana individuals and businesses manage these layers.
State Income Tax
Indiana taxes individual income at one flat rate, starting from federal adjusted gross income with Indiana add-backs and deductions. Nonresidents pay Indiana tax on Indiana-source income, but Indiana has reciprocal agreements with several neighboring states, including Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin, for wages.
We prepare Indiana returns, apply Indiana's deductions and credits, and handle part-year and nonresident filings.
County Income Taxes and the January 1 Rule
All 92 Indiana counties impose a local income tax. The county that applies is generally determined by where you lived on January 1 of the tax year. If you lived outside Indiana on January 1 but worked in Indiana, the county where you worked on that date may tax you. Moving to another county during the year does not change your county for that year.
This creates practical issues:
- New residents who move to Indiana after January 1 generally owe no county tax for that year, but they owe it the following year
- Employees who move counties mid-year keep the January 1 county for withholding until the next year
- Rates differ by county and can change from year to year
We confirm county codes, prepare returns, and help employers withhold correctly.
Corporate and Pass-Through Taxes
Corporations pay Indiana's corporate adjusted gross income tax on income apportioned to the state. Financial institutions pay a separate financial institutions tax. Partnerships and S corporations file Indiana returns and must withhold state and county tax on distributive shares for nonresident owners, or file composite returns. Indiana also allows an elective pass-through entity tax, with credits for owners.
We prepare entity returns, handle nonresident withholding, and evaluate the PTE election.
Sales Tax: One Statewide Rate
Indiana's sales and use tax has a single statewide rate with no county or city sales taxes, which keeps rate management simple. Businesses need a registered retail merchant certificate for each location. Out-of-state sellers above Indiana's economic nexus threshold must register.
Local governments can still impose other taxes on specific sales:
- Food and beverage taxes in many counties and cities on prepared food and drinks
- Innkeeper's taxes on hotel and short-term lodging
- Admissions taxes in some places
Restaurants and lodging businesses may file these through the Department of Revenue or locally, depending on the jurisdiction. We help register, prepare returns, and reconcile them.
Business Personal Property and Property Tax Reform
Indiana businesses report personal property, such as equipment and furniture, to the county assessor each year. A threshold exempts businesses with smaller amounts of personal property, though some must still file to claim it, and that threshold is increasing. Indiana also enacted a broad property tax overhaul in 2025, with new homestead credits and other changes taking effect for 2026. We keep fixed asset records that support personal property returns and federal depreciation.
Estimated Payments for Owners and Retirees
Indiana individual estimated payments cover both state and county income tax, so business owners, retirees, and investors who do not have enough withheld need to include their county tax when calculating quarterly payments. Pass-through entities may also withhold county tax for nonresident owners or residents. We calculate estimates based on your county and expected income and adjust them during the year when income changes.
Payroll and County Withholding
Indiana payroll requires state and county income tax withholding, unemployment insurance reporting with the Department of Workforce Development, and new-hire reporting. County withholding is based on each employee's January 1 county, which employers collect on Indiana Form WH-4. We set up payroll for these rules, file quarterly reports, and handle reciprocity for employees from neighboring states.
Manufacturing, Logistics, Farms, and Restaurants
- Manufacturing and automotive: fixed assets, inventory, and personal property reporting
- Logistics and distribution: apportionment for multistate carriers and warehouses
- Agriculture: farm reporting, equipment depreciation, and agricultural exemptions
- Life sciences and health care: practice accounting and staff across several counties
- Restaurants and hospitality: food and beverage and innkeeper's taxes
Moving to Indiana After January 1
Someone who moves to Indiana from Illinois or Ohio partway through the year files a part-year Indiana return and a part-year return in the former state. Because county tax is based on January 1, that person generally owes no Indiana county tax for the year of the move, but will owe it the next year. Employers should still collect the employee's county information at hire so withholding is right when the new year starts. We handle both returns and the county change.
Books Built Around County Codes
Indiana books should track prepared food and lodging sales for local taxes, employee county codes for withholding, and fixed assets by county for personal property returns. We set up the chart of accounts and payroll records to provide these figures.
Contacting BOMCAS About Indiana
Employers with staff in several counties, restaurants filing food and beverage taxes, and pass-through entities with nonresident owners can contact BOMCAS for a remote review. Pages for individual Indiana cities and services will follow under this section. Return to the BOMCAS home page or our United States services for more. This page summarizes Indiana rules and is not advice on a specific return.
Talk to BOMCAS About Your Indiana Taxes
Have a question about your Indiana filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.