Indiana Business Taxes for LLCs
What taxes does your Indiana LLC need to pay? This guide covers state income tax, sales tax, self-employment tax, payroll withholding, and how to register with the Indiana Department of Revenue.
Bizee Editorial Staff
Editorial Team
Indiana LLC tax quick facts
Filing fee: $95 (online via INBiz)
Processing time: Typically 1–3 business days for online filings
State agency: Indiana Secretary of State / Indiana Department of Revenue
Annual report due: Biennial Business Entity Report — due every 2 years by the end of the LLC's anniversary month
State tax rate: Individual income tax rate: 3.05% (2024); Corporate income tax rate: 4.9% (2024); Sales tax rate: 7%
How Indiana taxes your LLC
Indiana LLCs don't pay income tax at the business level by default. Instead, profits pass through to the owners, who report them on their own Indiana and federal returns. Depending on how your LLC is structured, you may also owe self-employment tax, sales tax, and payroll withholding tax.
The taxes your LLC owes depend on 3 things: how many members it has, whether you've elected a different tax classification, and whether you have employees or sell taxable goods. Most Indiana LLC owners deal with at least 2 of the categories below.
- Indiana state income tax — reported on your individual return (single-member) or a partnership return (multi-member)
- Federal self-employment tax — 15.3% on net earnings, covering Social Security and Medicare
- Indiana sales tax — 7% on retail sales of tangible goods, if your LLC sells taxable products
- Payroll and withholding tax — required if your LLC pays employees wages in Indiana
- Federal income tax — pass-through to owners' Form 1040
Indiana state income tax
Indiana follows the federal tax classification of your LLC. A single-member LLC is taxed as a disregarded entity — you report the income on your individual Indiana return using the IT-40 series. A multi-member LLC files a partnership return on Form IT-65, and each member reports their share on their own return.
Indiana's individual income tax rate is 3.05% for 2024. If your LLC has elected to be taxed as a corporation, it files Form IT-20 and pays Indiana's corporate income tax rate of 4.9%. Indiana does not have a franchise tax, which is one less obligation compared to many other states.
Indiana also has a Pass-Through Entity Tax (PTET) election that some LLC owners use to pay state income tax at the entity level rather than the individual level — a strategy worth discussing with a tax professional if you're looking to reduce your federal tax liability.
Indiana sales tax
Indiana's sales tax rate is 7%, and your LLC needs to collect it if you sell tangible personal property at retail. Before you make your first sale, you need to get a Registered Retail Merchant Certificate (RRMC) from the Indiana Department of Revenue. You register through the INBiz portal using the Business Tax Application (Form BT-1).
Indiana requires a separate RRMC for each physical location where retail sales occur. If you sell online and have Indiana nexus, you may also need to register. A tax professional can help you figure out whether your specific sales activity triggers the registration requirement.
Self-employment tax
If your Indiana LLC is taxed as a sole proprietorship or partnership, your share of the business profits is subject to federal self-employment tax. The rate is 15.3% — 12.4% for Social Security and 2.9% for Medicare — applied to 92.35% of your net self-employment earnings. You calculate this on Schedule SE and file it with your Form 1040.
Self-employment tax is separate from your federal and state income tax. Most LLC members also need to make quarterly estimated tax payments to both the IRS and the Indiana Department of Revenue to avoid underpayment penalties. The IRS uses Form 1040-ES for federal estimates; Indiana has its own estimated payment process through INTIME.
Payroll and withholding tax
If your LLC pays employees for work performed in Indiana, you're required to register for Indiana withholding tax and withhold state income tax from each paycheck. Before withholding, have each employee complete Indiana Form WH-4, which tells you the correct state and county withholding amounts.
Indiana has 92 counties, and each one can levy its own local income tax on top of the state rate. You withhold county tax based on where the employee lives or works — whichever applies under state rules. This is one of the details that catches Indiana employers off guard, so it's worth getting your payroll setup right from the start.
Plus, as an employer you're also responsible for federal payroll taxes — FICA (Social Security and Medicare) and federal unemployment tax (FUTA). A tax professional can help you figure out your full payroll tax obligations before you bring on your first employee.
How to register for Indiana business taxes
Indiana LLCs that will collect sales tax, withhold employee income tax, or otherwise owe state business taxes need to register with the Indiana Department of Revenue before they start those activities. Registration is done through the Online Business Tax Application (Form BT-1), which you can access directly through the Indiana DOR website or through the INBiz portal.
Form BT-1 covers multiple tax types in a single application — sales tax, withholding tax, and others — so you don't need to file separate registrations for each one. Once registered, you'll file returns and make payments through INTIME, Indiana's online tax portal.
INBiz is also where you'll handle your biennial Business Entity Report — the periodic filing Indiana requires all LLCs to submit to stay in good standing with the Secretary of State. Online filings through INBiz process faster than paper filings.
- Go to INBiz (inbiz.in.gov) or the Indiana DOR website
- Complete Form BT-1, the Online Business Tax Application
- Select the tax types that apply — sales tax, withholding, or both
- Receive your Registered Retail Merchant Certificate if you registered for sales tax
- Use INTIME to file returns and make payments going forward
FAQ
Yes. Indiana taxes LLC income at the owner level, not the business level. A single-member LLC reports income on the owner's individual Indiana return (IT-40 series) at the 3.05% individual rate. A multi-member LLC files Form IT-65, and each member reports their share individually. If your LLC elected corporate tax status, it files Form IT-20 at the 4.9% corporate rate.
Yes. Indiana's sales tax rate is 7%. If your LLC sells tangible personal property at retail, you need to register for a Registered Retail Merchant Certificate through the INBiz portal before making your first sale. A separate certificate is required for each physical business location.
No. Indiana does not have a franchise tax. Unlike states such as California or Texas, Indiana LLCs don't owe a minimum annual franchise or privilege tax just for existing. Your main ongoing state obligations are income tax on profits and the biennial Business Entity Report filed with the Secretary of State.
Yes, in most cases. If your LLC's income isn't subject to withholding — which is typical for pass-through LLCs — you'll need to make quarterly estimated tax payments to both the IRS and the Indiana Department of Revenue. Use IRS Form 1040-ES for federal estimates and Indiana's INTIME portal for state estimates. Missing payments can mean underpayment penalties.
Indiana business taxes are filed and paid through INTIME, the Indiana Department of Revenue's online tax portal. Once you've registered your LLC for state taxes using Form BT-1 through INBiz, you'll use INTIME to file sales tax returns, remit withholding tax, and make estimated income tax payments.
Self-employment tax is a federal tax — not a state tax — that funds Social Security and Medicare for LLC members who don't receive a W-2. The rate is 15.3% on 92.35% of your net self-employment earnings. You calculate it on Schedule SE and file it with your Form 1040. Indiana does not add a separate self-employment tax on top of this.
Yes. Indiana's corporate income tax rate is 4.9% for 2024. This applies to LLCs that have elected to be taxed as a C Corporation by filing IRS Form 8832. Those LLCs file Indiana Form IT-20. Most LLCs don't elect corporate status — they're taxed as pass-through entities by default — but the election can make sense in certain situations. A tax professional can help you figure out whether it's right for your business.
