Adjusted Gross Income Tax

Taxpayer: All corporations doing business in Indiana, except S corporations and not-for profit organizations.

Tax Base: Federal taxable income with four modifications:

1. Subtract any income that federal law or the Constitution prohibits Indiana from taxing.
2. Add deductions allowed for charitable contributions.
3. Add deductions allowed under federal law for state income taxes and depreciation differences.
4. Appropriation income to Indiana based on the average percentage of property owned in Indiana, payroll paid in Indiana, and sales volume attributable to Indiana.
5. Add the domestic activities deduction under IRC 199.
6. Add the increased §179 deduction.
7. Add the federal NOL deduction.
8. Add the dividends received from a captive REIT.
9. Add back intercompany and intangible expenses and interest related to intangible.

Tax Rate: 8.5%

Individual Adjusted Gross Income Tax

Taxpayer: Individuals, partners, stockholders in S corporations, and nonresidents with income from sources in Indiana.

Tax Base: Federal adjusted gross income with several adjustments permitted by Indiana law.

Tax Rate: 3.4%

Major Deductions and Exemptions: Income tax which is exempt under federal law or the Constitution. A $1,000 deduction for the taxpayer, spouse and each dependent. An additional $1,500 for each dependent child. Rent up to $2,500. A $1,000 exemption for each person who is age 65 and over and/or blind. A qualified employee working an living in an enterprise zone is entitled to a tax deduction equal to the lesser of 50% of earnings or $7,500. Numerous credits are permitted against this tax.

Sales Tax

A 7% tax is based on the sales of tangible personal property. No sales tax is paid on equipment and utility services used for manufacturing purposes. Certain local governments may also impose taxes on food and beverages, admissions and local occupancies.

Property Tax

The state, cities, counties and special taxing districts impose takes on all real and personal property not specifically exempted. Property is assessed at true value. Real property is assessed where located.

Basic Tax Structure