Indiana taxes

Indiana taxes personal income at a flat 3%, and every county adds its own income tax of 0.5% to 3% on the same income. A sole proprietor owes no separate business tax. LLCs, partnerships and corporations file a business entity report every two years, from $32. C corporations pay 4.9% corporate income tax, and a partnership or S corporation must pay Indiana tax for its owners who live elsewhere through a composite return.

Personal income tax

Indiana residents file Form IT-40. The state rate is a flat 3%, and each of Indiana's 92 counties adds its own income tax on the same taxable income, from 0.5% to 3%. County tax can be larger than the state tax. It is set by the county you lived in on January 1, 2025, even if you moved later in the year.

Indiana has no standard deduction. Instead you get a $1,000 exemption for yourself, even if someone else claims you as a dependent, and $1,000 for each dependent, plus $1,500 more for each dependent child. Renters can deduct up to $3,000 of rent and homeowners up to $2,500 of property tax.

Indiana does not tax Social Security or Railroad Retirement Board benefits. Ordinary pensions, 401(k) withdrawals and IRA money are taxed in full.

Return

Form IT-40

State rate

3% flat

County tax

0.5% to 3%, set by your county on January 1, 2025

Standard deduction

None

Personal exemption

$1,000 each for you and your spouse

Dependents

$1,000 each, plus $1,500 per dependent child, or $3,000 in the first year a child qualifies

Age 65 or over, or blind

$1,000 for each, plus $500 more at 65 or over with federal adjusted gross income under $40,000 ($20,000 married filing separately)

Renter's deduction

Up to $3,000, or $1,500 married filing separately

Homeowner's property tax deduction

Up to $2,500, or $1,250 married filing separately

Not taxed

Social Security and Railroad Retirement Board benefits

Sole proprietor

A sole proprietor with no LLC files no business entity report and owes Indiana no business fee. The report is only for registered entities.

Your business profit is taxed on your own Form IT-40, at the state rate plus your county's rate.

Single-member LLC

Every Indiana LLC files a business entity report with the Secretary of State every second year, however few members it has. It costs $32 filed online through INBiz or $50 on paper, and it is owed even in a year the business does nothing.

It is due by the end of the LLC's anniversary month, in every second year counted from the year it was formed, so two similar LLCs can be due in opposite years. The LLC's profit is taxed on your own Form IT-40.

Partnership

An Indiana partnership files Form IT-65, the partnership return. If any partner lives outside Indiana, the partnership must file a composite return covering all of them and pay their Indiana tax. It must also register with the Department of Revenue as a withholding agent for their shares.

Leaving even one nonresident partner out of the composite return brings a flat $500 penalty, the same for a small business as a large one. An LLC, limited partnership or LLP also files the business entity report every two years, from $32.

S corporation

An Indiana S corporation files Form IT-20S, the S corporation income tax return. The same composite return rule applies: shareholders who live outside Indiana must all be included and their Indiana tax paid, with a flat $500 penalty for leaving one out.

It also files the business entity report every two years, from $32.

C corporation

A C corporation files Form IT-20 and pays 4.9% of its Indiana adjusted gross income. A corporation selling into other states counts only its Indiana share, measured by sales alone on Schedule E.

Indiana has no minimum income tax, so in a loss year the only cost is the business entity report, from $32 every two years.

Return

Form IT-20

Corporate income tax

4.9% of Indiana adjusted gross income

Multi-state profit

Indiana sales over total sales

Business entity report

$32 online or $50 on paper, every two years

Estimate your state tax

Pick your business type and enter this year's numbers to see the state business tax Indiana charges. It assumes all your sales are in Indiana.

An estimate for planning, not tax advice.

Sources

• Indiana 2025 IT-40 Full-Year Resident Individual Income Tax Booklet (forms.in.gov)
• 2025 Indiana County Income Tax Rates and County Codes, R24/9-25 (in.gov/dor)
• inbiz.in.gov Business Entity Reports ("$32.00 on INBiz", "$50.00 by Paper", biennial, anniversary month)
• forms.in.gov Indiana Business Entity Report, State Form 48725 (R18 / 01-26): "$50 fee and file a report every other year"
• in.gov/dor 2025 IT-65 Partnership Return Booklet: compulsory composite return and the $500 penalty
• in.gov/dor 2025 IT-20S S Corporation Booklet: withholding under IC 6-3-4-13 and the composite requirement
• in.gov/dor 2025 IT-20 Corporate Income Tax Booklet: "The corporate AGI tax rate is 4.9%"
• in.gov Indiana IT-20 Corporate Income Tax Booklet
• in.gov Income Tax Information Bulletin #12
• forms.in.gov Schedule E, apportionment of adjusted gross income for corporations

Last reviewed August 2026.