Indiana LLC Taxes

Indiana’s growing economy and midwestern charm make it an increasingly popular place to begin a business. Yet, as more business owners choose to start new ventures in the state, many may find it challenging to understand the business taxes involved. 

Regardless of the size of your business, if you operate a limited liability company (LLC) in Indiana, you must stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand the taxes you must pay for your Indiana LLC.

Recommended: Schedule a free consultation with an accountant to stay on top of your taxes. 

Indiana LLC Taxes Owed

LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of Indiana. Instead, LLC owners must pay taxes on their portion of the income generated by the LLC. 

In Indiana, LLC owners can expect to pay the following taxes:

Federal Taxes

Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.

Federal Self-Employment Taxes

It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%. 

Federal Income Taxes

Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.

Indiana State Taxes

Every state has its own laws that dictate how it taxes individuals and businesses. Below, you’ll find details on some of the most important state-level taxes that affect LLCs in Indiana.

Indiana Income Taxes

The state income tax rate in Indiana is 3.23%. This is quite low when compared to other states across the country — most of which have rates of 4% or higher.

Indiana Sales and Use Tax

Indiana’s state sales tax rate is 7% — one of the highest in the country when compared to other states. However, Indiana cities and counties don’t levy additional, local sales taxes so 7% is the most the rate can be statewide. 

Register for a Retail Merchant Certificate

If your business sells taxable goods or services, you must register with the Indiana Department of Revenue to receive a sales tax license (also known as a Registered Retail Merchant Certificate). You can do this on the Indiana Department of Revenue website.

Additional State Taxes

The Indiana Department of Revenue oversees the collection of various state-specific taxes that your business may have to pay, depending on its location, industry, and number of employees. Examples of these additional taxes include:

  • Fuel Tax
  • Innkeeper’s Taxes
  • Motor Vehicle Rental Tax
  • Fireworks Public Safety Fee
  • Tire Fee

To learn more, visit the Indiana Department of Revenue website.

Indiana Local Taxes

The local laws and ordinances of one city or county in Indiana will differ from those in another. Regardless of where you live in Indiana, we recommend you check with your local jurisdiction and ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.

Indiana LLC Compliance

To remain in good standing with the state of Indiana, your business must follow state and local laws. While LLCs technically don’t file taxes with the state, Indiana businesses must still file a business entity report every other year.

Indiana Business Entity Report

Every two years, Indiana LLCs must file a business entity report with the Indiana Secretary of State. These reports help the state maintain accurate contact information for your business. You can file your report by mail or online for a $50 or $31 fee, respectively.

Your business entity report is due by the last day of your LLC’s anniversary month — the month in which the state approved your LLC’s formation. If you formed your LLC on March 18, 2024, for example, you’d need to file your first business entity report by March 31, 2026.

For more information, check out our Indiana LLC Business Entity Report guide.

LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.