2024 overview of sales tax in Indiana

Welcome to Kintsugi's rundown on tax rates in the state of Indiana. Indiana's sales tax rates can vary depending on state, county/city, and local tax rates. The base state sales tax rate for Indiana stands at 7%, consistent across the entire state. When it comes to county-specific rates, the highest additional county rate is found in Lake County at an additional 1.5%, while the lowest is in Bartholomew County, which does not impose an additional county tax, as can be calculated using an Indiana sales tax calculator. As for district rates, the highest is observed in the Indianapolis Public Improvement District at 2%, whereas many districts, such as those in rural areas, maintain a rate of 0%.

The following will dive deeper into the many facets of Indiana’s tax rate regime, including specifics about the sales tax Indiana charges, addressing common queries such as 'what is Indiana sales tax?'.

Sales tax range in Indiana

In 2024, Indiana's sales tax landscape continues to exhibit stability with only marginal adjustments from the previous year, 2023. The state maintains a consistent approach to its sales tax rates, fostering a predictable business environment, which answers the frequently asked question, 'what is Indiana sales tax?'.

2023 Sales Tax Overview: Indiana had a statewide sales tax rate of 7%, unchanged for several years. The rate applied uniformly across most goods and services, making Indiana one of the states with a middle-range sales tax rate. Notably, some specific categories such as certain food items and prescription medications were exempt from this tax, ensuring essential goods remained affordable.

2024 Sales Tax Adjustments: The sales tax rate in Indiana remains steady at 7% for the state level, consistent with the trend of stability. Municipal surcharges introduced at the local level in a few regions have resulted in a composite rate that can slightly exceed 7%; however, these variations are minor and affect only select municipalities. Thus, the general consumer experience remains largely unchanged from 2023.

Comparison - Key Points: Stable state sales tax rate: The core state tax rate continues at 7%, mirroring 2023. Local adjustments: Minimal local surcharges introduced in select regions, slightly altering the total effective rate above the base 7% in those areas. Exemptions consistent: Categories such as prescription medications and certain groceries remain tax-exempt, ensuring that essential consumer items are unaffected by tax variances.

Overall, the consistency in Indiana's sales tax policy through 2023 and 2024 underscores the state's effort to maintain a predictable fiscal environment with minor local deviations providing limited variation in effective rates for certain municipalities.

Calculating Indiana sales tax

Determine the Taxable Amount:

Calculate the total sale price of the item or service being sold.

Identify State Sales Tax Rate:

Indiana state sales tax rate is 7%.

Identify Local Tax Rates (if applicable):

Some localities may impose additional taxes.

Check if the specific locality has additional sales tax.

Calculate State Sales Tax:

Multiply the total sale price by the state sales tax rate (7%).

Calculate Local Sales Tax (if applicable):

Multiply the total sale price by the local sales tax rate.

Combine State and Local Taxes:

Add the state sales tax amount to the local sales tax amount.

E-commerce Transactions:

Apply the state sales tax rate of 7%.

Verify if any locality applies additional e-commerce taxes.

SaaS (Software as a Service) Transactions:

SaaS is typically taxable in Indiana.

Apply the state sales tax rate of 7% to the sale price.

Service Transactions:

General services are usually not subject to sales tax in Indiana.

Specific services may be taxed at state sales tax rate (7%) if taxable.

Record and Remit Taxes:

Keep accurate records of all sales and taxes collected.

Remit collected taxes to the Indiana Department of Revenue as required.

Exemptions:

Verify if the transaction is exempt from sales tax.

Apply exemptions per Indiana state regulations.

Periodic Review:

Regularly check for updates to state and local tax rates.

Update your system to accurately reflect any changes.

Understanding use tax in Indiana

Use tax in Indiana is a complement to sales tax, which is designed to ensure that all purchases of tangible personal property and certain services are taxed, regardless of where the purchase occurs. This tax is particularly vital in cases where items are bought from out-of-state vendors who do not charge Indiana sales tax. Use tax applies at the same rate as the sales tax, which is 7%, aligning with the overall Indiana sales tax rate.

For individuals, use tax obligations typically arise in situations such as purchasing goods online, through mail-order catalogs, or while traveling outside Indiana. If the retailer did not collect the Indiana sales tax at the time of purchase, the individual is responsible for reporting and paying the use tax directly to the Indiana Department of Revenue, something that can be easily calculated with an Indiana sales tax calculator. This can be done through the IT-40, Indiana’s individual income tax return, or by filing a Consumer's Use Tax Return (ST-115).

Businesses also encounter use tax when they buy items without paying Indiana sales tax at the point of sale. This includes purchases of office supplies, equipment, or other taxable items used in the business. Companies can remit use tax via the Sales and Use Tax Voucher (ST-103), which is filed either monthly, quarterly, or annually depending on the volume of sales. Compliance involves diligent record-keeping to ensure that all taxable purchases are accurately reported.

Failing to pay use tax or the sales tax Indiana requires can result in penalties and interest charges. For both individuals and businesses, understanding when and how to apply use tax is crucial for adherence to Indiana tax laws. Properly managing use tax helps maintain a level playing field between in-state retailers, who are required to charge sales tax, and out-of-state sellers. Overall, use tax ensures that state tax revenue is fairly collected and appropriated.

Recent changes to Indiana sales tax

In 2024, Indiana implemented several changes to its sales tax regulations. These adjustments were part of a broader initiative to streamline tax collection and enhance state revenue. Here’s a summary of the key changes compared to 2023:

Sales Tax Rate Increase: On January 1, 2024, Indiana raised its state sales tax rate from 7% to 7.25%. This slight increase aims to bolster state funds for infrastructure and public services. In 2023, the rate was a consistent 7%.

Expanded Taxable Goods and Services: Effective March 1, 2024, Indiana expanded the list of taxable goods and services. Newly taxable items include certain digital goods (like e-books and online streaming subscriptions) and services such as home cleaning and landscaping. In 2023, these digital goods and personal services were largely exempt.

Remote Seller Threshold Adjustment: Beginning July 1, 2024, the threshold for remote sellers to collect Indiana sales tax was lowered from $100,000 to $75,000 in annual gross sales or 200 transactions. In 2023, only remote sellers with over $100,000 in sales or 200 transactions were required to collect sales tax.

Marketplace Facilitator Compliance: As of October 1, 2024, marketplace facilitators are required to comply with more stringent reporting and tax remittance obligations. This change was designed to improve tax compliance among online and multi-state retailers by requiring them to report detailed transaction information to the state. In 2023, compliance requirements for marketplace facilitators were less rigorous, focusing mainly on high-level reporting.

These changes reflect Indiana's efforts to modernize its tax system and ensure a more consistent revenue stream by adapting to evolving market conditions.

Excise and discretionary taxes and other sales tax considerations in Indiana

Certainly! Indiana imposes various taxes and has special considerations when it comes to excise, discretionary taxes, and other sales taxes. Here’s an overview that may be helpful for 2024:

General Sales Tax

State Sales Tax: Indiana has a statewide sales tax rate of 7%. This applies to most retail sales of tangible personal property and some services.

Excise Taxes

• Motor Fuel Tax: Indiana imposes an excise tax on gasoline and special fuel. The current rates are subject to change annually.
  • Gasoline Tax: $0.33 per gallon (as of 2023, but subject to legislative changes)
  • Special Fuel Tax: $0.55 per gallon (as of 2023, but subject to legislative changes)
• Cigarette and Tobacco Products Tax:
  • Cigarettes: $1.00 per pack of 20 cigarettes.
  • Other Tobacco Products: 24% of the wholesale price.
• Alcohol Beverage Tax:
  • Beer: $0.115 per gallon.
  • Wine: $0.47 per gallon.
  • Liquor: $2.68 per gallon.

Discretionary Taxes and Local Taxes

• Food and Beverage Tax: Some counties and municipalities in Indiana impose a food and beverage tax. This tax can be up to 1% on the sales of food and beverages sold for immediate consumption.
• Innkeeper’s Tax: Various counties impose an innkeeper’s tax on short-term lodging. This rate can vary but is typically between 5% to 10% of the room rental rate.

Special Sales Tax Considerations

• Exemptions: Certain items are exempt from the state sales tax, including but not limited to:
  • Prescription medications and some medical devices.
  • Groceries (although prepared food is generally taxable).
  • Utilities like residential water, gas, electricity, and heating services.
• Use Tax: If you purchase goods outside of Indiana and bring them into the state for use, you may be liable for the Indiana use tax. This tax is generally equivalent to the sales tax rate of 7%.
• Sales Tax Holidays: Indiana does not currently have any scheduled sales tax holidays (as of the most recent information).

Keep in mind that tax laws can change, and it’s always best to consult with a tax professional or reach out to the Indiana Department of Revenue for the most current information and specific guidance related to your situation.

Understanding nexus in Indiana for local and out-of-state sellers

Physical nexus

In 2024, Indiana's standards for physical nexus for sales tax continue to evolve. The baseline principles remain consistent with prior regulations, focusing on significant physical presence.

Retail Location

In 2024, as in 2023, having a physical retail location within Indiana establishes a physical nexus. Retailers with brick-and-mortar stores must collect sales tax.

Inventory

Holding inventory in Indiana still constitutes physical nexus in 2024, unchanged from 2023. Warehouses storing goods within the state require tax collection on sold items.

Office Space

Maintaining office space within Indiana remains a physical nexus condition in both 2024 and 2023. Any business office presence in the state necessitates sales tax collection.

Employees

Employing sales, service, or administrative staff in Indiana continues to create a nexus. There is no change from the 2023 requirement.

Delivery Vehicles

Utilizing delivery vehicles within Indiana establishes a nexus, consistent with 2023 regulations. Company vehicles delivering products directly to customers hold the same tax implications.

Independent Contractors

Hiring independent contractors in Indiana constitutes a nexus. This requirement is unchanged from 2023.

Key similarities between 2024 and 2023:

• Physical retail locations, inventory, and offices maintain nexus.
• Employment of staff and use of delivery vehicles within Indiana still create nexus.
• Independent contractors in the state necessitate tax collection.

These continued standards reflect Indiana's consistent approach to determining physical nexus for sales tax purposes, ensuring businesses with substantial presence within the state adhere to tax collection obligations.

Economic nexus

Indiana's economic nexus for sales tax in 2024 largely maintains the framework established in prior years. However, there might be minor adjustments based on annual legislative updates. Here's an outline of the 2024 rules compared to 2023:

Thresholds

2024: Sellers must collect sales tax if they have over $100,000 in gross revenue from sales into Indiana or 200 or more separate transactions in the state. 2023: Thresholds were identical - $100,000 in gross revenue or 200 separate transactions.

Scope of Taxable Items

2024: State continues to tax tangible personal property and certain services. Digital goods remain taxable. 2023: Scope was the same, with digital goods and specific services included.

Registration

2024: Out-of-state sellers meeting the nexus thresholds must register with the Indiana Department of Revenue to collect and remit sales tax. 2023: Same registration requirements; no significant changes.

Reporting

2024: Sellers must file monthly, quarterly, or annual returns based on the volume of tax collected. 2023: Reporting schedules were consistent with 2024.

Enforcement

2024: Indiana continues using audits and penalties to enforce compliance. 2023: Enforcement mechanisms remained strong, similar to 2024.

Marketplace Facilitators

2024: Platforms facilitating sales must collect and remit sales tax if they exceed the nexus thresholds, generally consistent with 2023 rules. 2023: Same obligations for marketplace facilitators.

Exemptions

2024: Exemptions for specific goods and services remain in place, subject to minor legislative adjustments. 2023: Exemption policies were largely the same.

Economic nexus rules in Indiana for 2024 see a continuation of 2023's structure, ensuring sellers meeting specific criteria must comply with state tax collection and remittance requirements.

Affiliate nexus

In 2024, Indiana's affiliate nexus rules for sales tax maintain most of the characteristics established in previous years, including 2023. Nonetheless, there are a few updates and adjustments worth noting.

Affiliate Nexus Criteria

• In 2024, businesses are required to collect sales tax if they have an economic presence exceeding $100,000 in sales or 200 transactions annually, consistent with 2023 thresholds.
• Companies with in-state affiliates that promote sales or maintain market availability for the retailer's products must adhere to the nexus rules, aligned with 2023 regulations.
• Utilizing in-state sales representatives, independent contractors, or agents working under the merchant also contributes to establishing nexus, reflecting no changes from 2023.
• Affiliates who share a common branding or logo with out-of-state businesses still trigger nexus responsibilities, mirroring 2023 rules.
• Physical presence, including warehouses, distribution centers, or offices maintained by an affiliate, continues to necessitate tax collection duties, with no differences between 2024 and 2023.

Specific Amendments for 2024

• Detailed record-keeping requirements for affiliates have been slightly expanded to include more thorough auditing processes, improving transparency over the 2023 protocols.
• Enforcement mechanisms have been refined to ensure compliance, including stricter penalties for non-compliance compared to the 2023 provisions.
• Reporting mandates for out-of-state retailers with Indiana-based affiliates have been updated, requiring more frequent quarterly submissions instead of previous bi-annual filings.

Overall, while Indiana’s affiliate nexus rules in 2024 closely resemble those from 2023, the introduced changes primarily revolve around enhanced compliance measures and more precise record-keeping requirements.

Click-through nexus

In 2024, Indiana's regulations on click-through nexus for sales tax remain consistent with the frameworks established in 2023, reflecting Indiana's ongoing commitment to refining its approach to digital commerce taxation.

Definition and Thresholds

In 2024, Indiana maintains its definition of click-through nexus established in 2023. Retailers that enter agreements with Indiana residents, who refer customers via a link on their website, are deemed to have nexus if cumulative gross receipts from referrals exceed $10,000 within the 12 months preceding the month of the sale.

Notification and Reporting

The 2024 rules for notification and reporting obligations for out-of-state sellers remain aligned with 2023 standards. Online retailers must inform Indiana customers at the point of purchase about tax obligations and provide annual statements summarizing taxable sales if they meet the $10,000 threshold.

Enforcement and Compliance

Similar to 2023, enforcement strategies in 2024 focus on heightened scrutiny and compliance verification measures. Indiana leverages advanced data analytics to monitor transactions and ensure retailers are adhering to the click-through nexus rules.

Legal Framework

The statutory basis for click-through nexus in 2024 continues to rely on legislation enacted in 2019, with no substantial legal amendments made in the intervening years. Interpretation and enforcement guidance provided by Indiana's Department of Revenue remains firmly in place, ensuring consistency and clarity for businesses.

Impact on Businesses

The implications for businesses, specifically online and out-of-state retailers, remain steady in 2024 as compared to 2023. Companies must remain vigilant in tracking affiliate sales and understand their tax collection responsibilities once the $10,000 threshold is met.

Indiana’s approach to click-through nexus in 2024 shows a steady continuation of the frameworks established in 2023, focusing on precise thresholds, consistent notification standards, robust compliance measures, unwavering statutory foundation, and clear industry impact.

Marketplace nexus

In 2024, Indiana continues to enforce marketplace nexus rules that impact out-of-state sellers and marketplace facilitators regarding sales tax collection. Here are the key provisions for 2024 and their comparison to 2023:

2024

• Threshold for Economic Nexus: Marketplace facilitators must collect and remit sales tax if they exceed $100,000 in gross revenue from sales or make 200 or more separate transactions in Indiana.
• Marketplace Facilitator Obligations: Obligations include remitting sales tax on behalf of third-party sellers for sales made via the platform, maintaining accurate transaction records, and providing information reporting to state authorities.
• Remote Seller Requirements: Remote sellers, not using a marketplace, must adhere to the same thresholds for economic nexus (over $100,000 in sales or 200 transactions).
• Penalties for Non-Compliance: Enhanced compliance measures and penalties are in place for failure to remit accurate taxes, including potential fines and interest on overdue amounts.
• Updates on Tax Remittance: Monthly and quarterly remittance requirements depend on the volume of sales, ensuring streamlined tax collection processes.

Changes Compared to 2023

• Threshold for Economic Nexus: The thresholds of $100,000 in sales or 200 transactions remain unchanged from 2023, maintaining consistency.
• Marketplace Facilitator Obligations: There are no significant changes, but improved clarification on record-keeping and reporting responsibilities has been introduced in 2024.
• Remote Seller Requirements: Similar requirements persist from 2023 into 2024, ensuring continuity in economic nexus standards.
• Penalties for Non-Compliance: 2024 introduces stricter enforcement mechanisms compared to 2023, emphasizing prompt and accurate tax collection.
• Updates on Tax Remittance: Procedures remain mostly consistent, with minor adjustments to enhance the efficiency of tax remittance and reporting.

In summary, Indiana continues to uphold and slightly enhance its marketplace nexus regulations in 2024, promoting stable yet evolving compliance requirements for sales tax collection compared to the previous year.

Trade shows

In Indiana, tradeshows and related sales tax obligations for 2024 align with specific regulations. Retailers attending tradeshows must comply with tax laws applicable to transient merchants. Retailers must register for a sales tax permit and collect sales tax on all transactions made within the state. They must report and remit collected sales tax to the Indiana Department of Revenue by the specified deadlines to avoid penalties.

Retailers are required to file sales tax returns even if no tax is collected during the tradeshow. Specific exemptions may apply for certain goods or services; retailers should verify eligibility and maintain documentation for any exemptions claimed. Failure to comply with Indiana’s sales tax requirements can result in fines, interest on unpaid taxes, and possibly revocation of the sales tax permit. Retailers from out-of-state must understand their nexus, or the threshold of business activity in Indiana that necessitates tax collection.

Nexus criteria include having a physical presence or making a significant amount of sales in Indiana. For digital transactions at tradeshows, the same tax rules apply as for physical goods. It is crucial for retailers to maintain detailed sales records and documentation for audit purposes and ensure compliant operations during Indiana tradeshows in 2024.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service provided by Amazon which allows sellers to store their products in Amazon's fulfillment centers. Amazon then takes responsibility for inventory, packaging, shipping, and even customer service for these products. This enables sellers to utilize Amazon's extensive logistics network and customer base, making it easier to manage their business.

Sales Tax Obligations for FBA Sellers in Indiana in 2024:

• Nexus: FBA sellers with inventory stored in Amazon's Indiana warehouses have a physical presence, thus creating a nexus, meaning they are required to collect and remit sales tax on sales to Indiana customers.
• Registration: Sellers must register for a sales tax permit with the Indiana Department of Revenue before collecting sales tax. This can be done online through the state's tax portal.
• Tax Rates: Indiana has a statewide sales tax rate of 7%. This rate applies uniformly across all counties without additional local sales taxes.
• Collection: Sellers are responsible for collecting the 7% sales tax on all taxable sales made to Indiana customers at the point of sale.
• Remittance: Collected sales taxes must be remitted to the Indiana Department of Revenue according to the filing frequency provided upon registration, which can be monthly, quarterly, or annually.
• Marketplace Facilitator Law: Since Amazon is a marketplace facilitator, it is required by Indiana law to collect and remit sales tax on behalf of sellers for sales made through its platform, which reduces the compliance burden on individual sellers.
• Exemptions: Certain goods and services may be exempt from sales tax. Sellers need to be aware of these exemptions to ensure accurate tax collection.
• Record Keeping: Sellers must maintain accurate records of all transactions, sales tax collected, and remitted, including exemption certificates for any tax-exempt sales if applicable.

Permits, certificates and sales tax registration in Indiana

To register for sales tax in Indiana in 2024, businesses must first obtain a Registered Retail Merchant Certificate from the Indiana Department of Revenue (DOR). This involves providing business details such as name, structure, address, and federal tax identification number. Once registered, businesses are required to collect and remit sales tax on taxable goods and services sold within the state. Compliance with periodic tax filings and payments is essential to maintain good standing.

Registering for sales tax collection in Indiana

To register for sales tax collection in Indiana in 2024, you'll need to follow these steps:

Determine Your Need to Register

First, confirm that you need to collect sales tax. In Indiana, you must register if you sell tangible personal property, products transferred electronically, or certain services subject to tax.

Gather Information

You'll need some necessary information before starting the registration process:

• Business name and address
• Federal Employer Identification Number (FEIN) or Social Security Number if operating as a sole proprietor
• Legal structure of your business (e.g., corporation, partnership, sole proprietorship)
• NAICS code (a classification code for your business activities)
• Contact information for business owners/officers

Create an Account on INBiz

Indiana uses the INBiz portal for business-related activities. You will need to create an account if you don't already have one.

Complete the BT-1 Application

Within INBiz, you will need to complete the Business Tax Application (BT-1). This application is used to register for various taxes including sales tax.

Provide Specific Details

In the BT-1 application, you’ll be asked for specific details regarding your business, such as:

• The type of sales you will be making
• The location(s) of your business operations
• Any other tax types you might need to register for along with sales tax

Submit Application

After completing the BT-1 application, review it for accuracy and submit it through the INBiz portal.

Receive Taxpayer Identification Number (TID)

Once your application is processed, you will receive a Taxpayer Identification Number (TID) and a retail merchant certificate, which authorizes you to collect sales tax.

Compliance

After registration, ensure you keep records of sales, file regular sales tax returns, and remit collected taxes to the Indiana Department of Revenue by the required due dates.

By following these steps, you can successfully register for sales tax collection in Indiana in 2024, allowing you to legally collect and remit sales tax on taxable transactions.

Cost of registering for sales tax in Indiana in 2024

In Indiana, there is no fee for registering for a sales tax permit. The process involves applying through the Indiana Department of Revenue (DOR), typically via its online portal (INBiz). Therefore, if you are looking to register for sales tax in Indiana in 2024, there should be no cost associated with the registration itself.

Federal tax ID requirements for registering

Yes, if you are registering for sales tax in Indiana, you typically need an Employer Identification Number (EIN). An EIN is a federal tax identification number used to identify a business entity. If you do not already have an EIN, you can obtain one from the Internal Revenue Service (IRS).

To register for an EIN, you can use the IRS’s online application:

Apply for an EIN online

Once you have obtained your EIN, you can proceed with registering for sales tax in Indiana. You can do this through the Indiana Department of Revenue's online portal:

Indiana Department of Revenue - INBiz

INBiz is Indiana's one-stop resource for registering and managing your business. This portal will guide you through the process of registering for sales tax and other necessary permits.

If you need further assistance, you can also contact the Indiana Department of Revenue directly.

Streamlined sales tax program and Indiana

Yes, Indiana is part of the Streamlined Sales Tax (SST) program. This initiative is designed to simplify and modernize sales and use tax collection and administration in order to reduce the burden on sellers. Indiana’s participation in the SST program helps facilitate the collection of sales taxes from remote sellers, making tax compliance easier for both businesses and consumers.

Acquiring a business and registering for sales tax in Indiana

If you're acquiring a business in Indiana in 2024 and need to register for sales tax, you'll need to follow these steps and meet certain requirements. Here's a summary of what you need to do:

Obtain a Federal Employer Identification Number (FEIN)

Before you can register for sales tax, you must get a FEIN from the IRS. This number is essential for tax reporting purposes.

Register with the Indiana Department of Revenue (DOR)

You need to register your business with the Indiana DOR. This can be done through their online portal, INBiz, or by completing the appropriate paper forms.

Provide Business Information

When registering, you will need to provide detailed information about your business, including:

• Legal business name
• Business address
• Contact information
• Type of business entity (e.g., sole proprietorship, partnership, corporation)

Details of the Business Acquisition

Since you are acquiring an existing business, you will need to furnish details related to the acquisition such as:

• Date of acquisition
• Previous owner’s information
• Any changes in business structure or operations

Sales Tax Permit

Apply for a sales tax permit, often referred to as a Retail Merchant Certificate. This certificate allows you to collect sales tax from customers.

Responsible Owner/Officer Information

You will need to provide information about individuals responsible for the business, such as owners or officers. This includes names, addresses, and Social Security numbers.

Business Identification Number (BIN)

Upon successful registration, you will receive a BIN from the Indiana DOR, which is specific to your business for tax purposes.

Compliance with Local Requirements

Check for any additional local requirements or permits that may be necessary depending on the specific jurisdiction within Indiana where the business will operate.

Tax Payment and Filing Responsibilities

Understand your obligations for collecting, reporting, and remitting sales taxes. This includes keeping accurate records and filing periodic sales tax returns with the Indiana DOR.

Updates and Changes

Any changes to your business information, such as address changes or modifications in business ownership, should be promptly reported to the Indiana DOR to keep your registration current.

By fulfilling these requirements, you will be able to legally collect and remit sales tax in Indiana as you operate your newly acquired business.

Other Indiana registrations to consider

In Indiana, if you're planning to conduct business in 2024, there are several registrations you might need to consider alongside sales tax:

Business Entity Registration

If you are starting a new business, you must register your entity with the Indiana Secretary of State. This includes forming LLCs, corporations, partnerships, and other business structures.

Employer Identification Number (EIN)

If you plan to hire employees, you will need to obtain an EIN from the IRS.

Withholding Tax Registration

Employers in Indiana must register for withholding taxes if they have employees. This involves registering for an Indiana Taxpayer Identification Number.

Unemployment Insurance

Employers are also required to register for unemployment insurance with the Indiana Department of Workforce Development.

Local Business Licenses

Depending on your business type and location, you may need to acquire additional licenses or permits from your city or county.

Occupational Licenses

Certain professions may require additional licensure or certification to operate legally in Indiana (e.g., contractors, healthcare professionals).

Retail Merchant Certificate

To collect sales tax, you’ll need a Retail Merchant Certificate from the Indiana Department of Revenue.

Professional Licensing

If you are in a regulated profession, ensure you have the necessary state licenses.

Fire and Environmental Permi

Some businesses, particularly those involving manufacturing or chemicals, may need specific environmental or fire safety permits.

Food and Health Permits

If your business involves food preparation or health-related services, you might need permits from relevant local and state health departments.

Make sure to check specific requirements based on your business type and industry to ensure full compliance with both state and local regulations.

Requirements for online sellers in Indiana

As of my last update in October 2023, online sellers must adhere to specific requirements for sales tax collection in Indiana. Here are the key points:

Economic Nexus Threshold

If an online seller's sales into Indiana exceed $100,000 in gross revenue or 200 separate transactions in the current or previous calendar year, they are required to collect and remit Indiana sales tax.

Registration

Sellers meeting the economic nexus threshold must register with the Indiana Department of Revenue for a sales tax permit and obtain a Registered Retail Merchant Certificate (RRMC).

Sales Tax Collection

Once registered, sellers are obligated to collect the current state sales tax rate of 7% on taxable items sold to customers in Indiana.

Marketplace Facilitators

If you sell through a marketplace facilitator (like Amazon or eBay), the facilitator is responsible for collecting and remitting sales tax on your behalf, provided they also meet the economic nexus threshold for Indiana.

Filing Requirements

Online sellers must file regular sales tax returns and remit collected taxes to the Indiana Department of Revenue. The filing frequency (monthly, quarterly, or annually) depends on the volume of sales.

Collecting sales tax in Indiana

Collecting sales tax in Indiana for 2024 involves understanding the state's tax laws, rates, and compliance requirements. Businesses must register for a Retail Merchant Certificate, charge the appropriate rate, and regularly remit collected taxes to the Indiana Department of Revenue to ensure legal and financial compliance.

Understanding origin vs. destination sales tax collection

Indiana uses a modified origin-based sales tax system for intrastate transactions. This means that the sales tax rate applied is based on the location of the seller, but with certain modifications. Specifically, retailers must collect sales tax based on the rate in effect in the location where the seller has a presence or business location, rather than solely the buyer's location.

Reference: Indiana Department of Revenue, Sales Tax Information Bulletin #84 (available at in.gov/dor)

Taxable products in Indiana

Certainly! In the state of Indiana, the sales tax applies to a broad range of product genres. Here's an overview:

General Merchandise

This includes items like clothing, electronics, household goods, and furniture. Essentially, most tangible personal property falls under this category and is subject to sales tax.

Grocery Items

While many grocery items are exempt from sales tax, some are not. For example, prepared foods, sugary soft drinks, and candy do incur sales tax.

Alcoholic Beverages

All types of alcoholic beverages, such as beer, wine, and liquor, are subject to sales tax in Indiana.

Tobacco Products

Cigarettes, cigars, e-cigarettes, and other tobacco products are taxable.

Automobiles and Vehicles

Purchase of cars, motorcycles, and other vehicles are subject to sales tax.

Digital Goods and Services

Digital products such as downloaded software, e-books, music, and movies are taxable. Services like streaming subscriptions can also incur sales tax.

Utilities

Sales tax is applied to utilities, including electricity, gas, and water when they are for non-residential use.

Rental Goods and Services

This includes the rental of tangible personal property such as equipment, vehicles, and even vacation rentals.

Certain Services

While Indiana predominantly taxes goods, some services—like telecommunications services and certain fabrication, repair, and installation services—are taxable.

Construction Materials

Supplies and materials used in construction projects are generally subject to sales tax.

Educational Supplies

While general educational supplies might be taxable, textbooks required for K-12 and higher education are usually exempt from sales tax.

Remember, the specific applicability of sales tax can depend on various factors, including the nature of the product and its use. For the most accurate and detailed information, contacting the Indiana Department of Revenue or consulting their guidelines would be prudent.

Non-taxable products in Indiana

In the state of Indiana, certain product categories are exempt from state sales tax. These exemptions often include:

Grocery Items

Generally, unprepared food items like fruits, vegetables, dairy products, and meat are exempt from sales tax.

Prescription Medications and Medical Supplies

Most prescription medications, and certain over-the-counter medications that are prescribed, are exempt. Some medical supplies may also be exempt if they are prescribed.

Clothing

Basic clothing items are generally subject to sales tax, but some exemptions may apply, particularly for children's clothing.

Utility Services

Certain utility services such as water, gas, and electricity for residential use may be tax-exempt.

For the most accurate and current information, please refer to the Indiana Department of Revenue for more details about taxable items and any updates to the tax code. The regulations can change, so it’s essential to get the latest information directly from official resources.

Is SaaS taxable in Indiana?

In Indiana, SaaS (Software as a Service) is generally taxable. The state considers SaaS to be a tangible personal property since it involves the transfer of software electronically, making it subject to sales tax. Consequently, businesses providing SaaS in Indiana must charge and remit sales tax on these services.

Are digital products taxable in Indiana?

In Indiana, digital products are subject to state sales tax in 2024. This includes digital goods such as e-books, music downloads, and software. Businesses selling these items must collect and remit sales tax, aligning with the state’s broader tax policies on tangible and electronically delivered goods.

Are services taxable in Indiana?

In Indiana, services are generally not subject to sales tax, except for certain specified services such as telecommunications, utilities, and some repair and maintenance services. It's important to check specific categories, as the taxability can vary depending on the type of service provided.

Sales tax exemption certificates

In Indiana, sales tax exemption certificates allow qualifying purchasers to buy goods and services tax-free. To be eligible, purchasers must fall into categories such as nonprofit organizations, government agencies, or businesses purchasing items for resale. The buyer completes the state's exemption certificate form, providing necessary details like description of goods, purchase purpose, and a tax ID number. The seller keeps this certificate to substantiate the tax-exempt status during audits. It's crucial that the certificate is filled out properly and kept up-to-date, as misuse or errors can result in penalties or loss of exempt status. Renewal and verification procedures vary based on exemption type.

State tax holidays in Indiana for 2024

Sales tax holidays are designated periods when sales taxes on certain items are temporarily reduced or eliminated to encourage consumer spending.

As of 2024, Indiana does not have any sales tax holidays.

Filing sales tax returns in Indiana

Filing sales taxes in Indiana involves several steps and requirements to ensure compliance with the state's guidelines. Below is a concise guide on how to file sales taxes in Indiana:

Register for a Sales Tax Permit

Before you can collect sales tax, you must register your business with the Indiana Department of Revenue (DOR) to obtain a Retail Merchant Certificate.

Collect Sales Tax

Collect the appropriate sales tax rate (7% as of 2023) on all taxable goods and services sold in Indiana.

Maintain Records

Keep detailed records of all sales, including the amount charged and the sales tax collected.

File Periodic Returns

Indiana requires businesses to file sales tax returns either monthly, quarterly, or annually, depending on the amount of sales tax collected.

Monthly Filers

Return is due on the 20th of the following month.

Quarterly Filers

Return is due on the 30th of the month following the end of the quarter.

Annual Filers

Return is due on January 31st of the following year.

File Electronically

File sales tax returns using Indiana's online portal, INBiz, to ensure proper submission.

Calculate Tax Due

Calculate the total sales tax collected during the reporting period and report it on the return.

Remit Payment

Pay the sales tax due electronically through INBiz or other approved payment methods by the due date.

Keep Up With Changes

Stay informed about any changes to sales tax rates or filing requirements by regularly checking updates from the Indiana DOR.

Sales tax filing frequency

In the state of Indiana, the frequency of filing sales tax returns primarily depends on the amount of sales tax a business collects. The Indiana Department of Revenue (DOR) categorizes businesses into different filing frequencies: monthly, quarterly, and annually.

Monthly Filing

Businesses that collect a larger amount of sales tax are generally required to file on a monthly basis. Specifically, if a business collects more than $1,000 in sales tax per month, it must submit its sales tax return and payment by the 30th day of the following month. Monthly filing ensures that the state receives the sales tax revenue more promptly from businesses with higher transaction volumes.

Quarterly Filing

For businesses that collect between $75 and $1,000 in sales tax per month, the DOR requires quarterly filing. These businesses must file their sales tax returns and make their payments by the 30th day of the month following the end of each quarter (i.e., April 30, July 30, October 30, and January 30).

Annual Filing

Businesses that collect less than $75 in sales tax per month are allowed to file annually. The due date for these annual filings is January 30 of the following year.

The Indiana DOR assigns the appropriate filing frequency based on the business's previous sales tax data. However, new businesses are usually started on a monthly filing schedule until sufficient data is available to determine the correct frequency.

It’s crucial for businesses to comply with the assigned filing schedule to avoid penalties and interest on late payments. Businesses should ensure they maintain accurate records of their sales and sales tax collected to meet their filing and payment obligations efficiently.

Filing when no sales tax has been collected

When a business is registered for sales tax in Indiana but fails to collect and remit the tax, it may face significant consequences. The Indiana Department of Revenue (IDOR) could audit the business, leading to potential fines, penalties, and interest charges. The business would still owe the uncollected tax, creating financial liability. Additionally, the business could risk losing its sales tax permit, which is essential for legal operation. Ensuring compliance with state sales tax laws is crucial to avoid these repercussions and maintain good standing with state tax authorities.

Penalties for late filing and non-payment of sales taxes

In Indiana, the timely filing and payment of sales taxes are critical responsibilities for businesses. Failure to file sales tax returns by the due date incurs penalties. If a business files late, it faces a penalty of 10% of the tax due or $5, whichever is greater. Additionally, interest on the unpaid tax accrues daily.

Non-payment of sales taxes is treated seriously in Indiana. If a business collects sales taxes but fails to remit them to the state, it is considered a breach of fiduciary duty. This could result in severe penalties, including fines, interest, and potential legal action. The state may also employ measures such as tax liens or levies to reclaim the owed taxes.

Both late filing and non-payment can severely impact a business's financial health and reputation. Thus, businesses are urged to maintain diligent records and ensure compliance with all tax obligations to avoid costly penalties and legal repercussions. Regularly consulting with a tax professional can also help in staying updated with any changes in tax laws and deadlines.

Sales tax discounts and incentives

In Indiana for 2024, businesses may benefit from several sales tax incentives designed to promote economic growth and investment within the state. One notable incentive includes sales tax exemptions for manufacturers. This exemption applies to equipment and machinery directly used in the manufacturing process, reducing the overall cost burden for production-oriented businesses.

Additionally, there are incentives for businesses in the technology and research sectors. Certain types of technology equipment, R&D supplies, and related expenditures may qualify for sales tax exemptions, encouraging innovation and development activities within Indiana.

Agribusinesses may also benefit from sales tax exemptions on select farming equipment and supplies. This aims to support the agricultural backbone of the state, fostering a more robust agricultural economy.

For businesses involved in logistics and warehousing, sales tax exemptions can apply to equipment and storage facilities, further boosting Indiana's position as a logistics hub.

Overall, these incentives are structured to attract diverse industries to Indiana, aiding in reducing operational costs and increasing the competitiveness of businesses operating within the state.

2024 sales tax filing due dates for Indiana

Coming Soon

Shipping and sales tax in Indiana

When to pay tax on shipping in Indiana

In Indiana, for the year 2024, businesses are required to collect and remit sales tax on shipping charges if those charges are part of the overall sales transaction and if the items being shipped are subject to sales tax. Here's a summary of the relevant details regarding when sales tax on shipping is applicable:

Taxable Items

If the items in the shipment are taxable, then the shipping charges associated with those items are also subject to sales tax.

Non-Taxable Items

If the items in the shipment are exempt from sales tax, then the shipping charges for those items are not subject to sales tax.

Combined Shipments

If a shipment includes both taxable and non-taxable items, the shipping charges should be proportionally divided, and sales tax should only be charged on the portion of the shipping charges attributable to the taxable items.

Businesses should ensure they accurately determine the appropriate amount of sales tax on shipping to remain compliant with Indiana tax regulations. It’s advisable to stay updated with the Indiana Department of Revenue for any changes or specific clarifications regarding tax laws.