Registering a Business In Indiana
You may need to register your business with the Indiana Secretary of state. Most businesses will also be required to register with the Indiana Department of Revenue. Indiana offers their INBiz system to register online.
S-Corporation Income Tax
Indiana recognizes the federal S-election, and Indiana S corporations are not required to pay income tax to the state. However, individual S corporation shareholders will owe state tax on their share of the company’s income. S corporations are required to file Form IT-20S.
LLC/Partnership Income Tax
Not required to pay income tax to Indiana. Business income is passed to partners who pay Indiana income tax on their personal return. Partnerships are required to file Form IT-65.
Indiana requires partnerships and s corporations with nonresident partners/shareholders to file a composite return. The composite schedules are to be included with the IT-20S or IT-65. Composite tax is taxed at the state income rate of 3.3%. A $500 may be assessed for any business that is required and fails to file a composite return.
Individual Income Tax
Indiana has a static conformity with the Internal Revenue Code as it existed on January 1, 2020.
The starting point for computing Indiana's personal income tax liability is the federal adjusted gross income.
Indiana does not offer a standard deduction or itemized deduction.
You can claim personal and dependent exemptions of $1,000 for each qualifying individual.
Indiana does not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.
Indiana has a flat state income tax rate of 3.23%. All individuals pay the same percentage regardless of income or filing status.
CARES Act Guidance
Indiana conforms to most CARES Act provisions. However, it specifically does not conform to the IRC Section 172 of the CARES Act regarding business net operating loss (NOL) provisions. Instead, Indiana will retain its treatment of business NOLs, not allowing any carryback and allowing only a 20-year carryforward.
Partnership, s corporation, and individual income tax returns are due by the 15th day of the fourth month following the close of the tax year. For calendar year filers, the date is April 15th.
Corporations who expect to owe more than $2,500 in taxes are required to make quarterly estimated payments. Form E-6 can be used to make payments.
Individuals who expect to owe more than $500 in taxes are required to make quarterly estimated payments. Form ES-40 can be used to make payments.
Filing an Extension
Indiana accepts the federal extension of time application Form 7004. Returns postmarked within 30 days after the last date indicated on the federal extension will be considered timely filed. If a federal extension is not requested, businesses may request an extension to file by writing to the Indiana Department of Revenue.
Indiana accepts the federal extension for individuals as well. Returns postmarked within 30 days after the last date indicated on the federal extension will be considered timely filed. Individuals may also request an extension by filing Form IT-9.
Failure to file an informational return in Indiana may result in a $10 penalty for each failure to file a timely return, not to exceed $25,000 in any calendar year.
Individuals may face a penalty of 10% of the amount due or $5, whichever is greater.
If your business was formed or is located in another state, but generates income in Indiana, it may be subject to Indiana taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Indiana Secretary of State:
Indiana Department of Revenue: