Craigville IN Sales Tax:
What Businesses Must Know

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.

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.

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.

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.

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.

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.

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.

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.