At a glance
- Corporate tax
- 4.9% flat
- Tax on wages
- 2.95% + county tax
- Sales tax
- 7%, no local
- Economic nexus
- $100,000 in sales
- Minimum wage
- $7.25/hr
- UI wage base
- $9,500
- New-employer UI rate
- 2.5%
- Paid leave program
- None
- Annual report
- Biennial; $31 online
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Register the corporation
Before hiring or opening an office in IndianaFile a Foreign Registration Statement (State Form 56369) with the Secretary of State through INBiz.
Register for withholding
Before the first Indiana payrollRegister with DOR (through INBiz) for state and county withholding; review Departmental Notice #1 for each employee’s county rate.
Open a DWD account
When you first pay Indiana wagesOpen an unemployment insurance account with DWD; a typical new employer pays 2.5% on the first $9,500.
Report new hires
Within 20 days of hireReport each new hire or rehire electronically to the Indiana New Hire Reporting Center.
Get workers’ compensation
Before the first employee startsBuy workers’ compensation insurance for Indiana employees.
Register for sales tax
When nexus startsRegister as a retail merchant once sales into Indiana exceed $100,000 in a calendar year, if you sell anything taxable there.
Calendar the entity report
Every other yearDiarize the biennial business entity report for the anniversary month of your registration.
The six areas
- AccountingAccounting and state tax in IndianaIndiana taxes C-corps at 4.9% on a single receipts factor, files separately, adds back bonus depreciation and lets 2022–2024 research costs be deducted in full.Corporate income tax4.9%
- ReceivablesReceivables and sales tax in IndianaIndiana charges a flat 7% with no local rates, counts only $100,000 of sales toward nexus since 2024, and doesn’t tax remotely accessed SaaS.Sales tax rate7%
- PayablesPayables and contractors in IndianaIndiana reconciles W-2s and 1099s with Indiana withholding on the WH-3 by January 31 and charges 7% use tax on untaxed goods, but not on remotely accessed software.WH-3 reconciliationDue Jan 31
- PayrollPayroll taxes and employer rules in IndianaIndiana withholds 2.95% state tax plus a county tax fixed by the employee’s January 1 county; new employers pay 2.5% UI on the first $9,500, and the minimum wage is $7.25.State income tax (2026)2.95%
- ComplianceCompliance and filings in IndianaIndiana has no franchise tax: a foreign registration, a $31 business entity report every other year, an IT-20 due May 15 and a January 31 withholding reconciliation.Foreign registrationState Form 56369
- AdvisoryAdvisory: credits and decisions in IndianaIndiana offers a nonrefundable research credit and fixed-date conformity that the legislature updates selectively; the remote-hire question is always which county.Research expense creditAvailable
Who you register with
- Indiana Department of Revenue (DOR)Corporate income tax, state and county withholding, sales and use tax, via INTIME
- Indiana Department of Workforce Development (DWD)Unemployment insurance account and quarterly reports
- Indiana Secretary of State — Business Services (INBiz)Foreign registration statement and the biennial business entity report
- Indiana Department of LaborMinimum wage and wage payment rules
- Indiana New Hire Reporting CenterNew-hire reporting
- Indiana Attorney General — Unclaimed Property DivisionAnnual unclaimed property report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Indiana’s neighbors.
- ILIllinoisA 9.5% combined corporate rate, plus Chicago’s own wage, leave and 15% cloud tax
- KYKentuckySimple state rates, local occupational taxes on wages and profits, and SaaS is taxed.
- MIMichigan6% CIT that still amortizes R&D, a refundable R&D credit and 24 city income taxes
- OHOhioNo corporate income tax, but city and school district taxes on every paycheck
Common questions
Do we amortize R&D for Indiana like we did federally?
No — Indiana went the other way. Since 2023 Indiana has let taxpayers deduct specified research expenditures from 2022 through 2024 in full in the year they were first deductible federally, then add back the federal amortization as it is taken. For domestic research costs from 2025 on, which the federal return now expenses, no Indiana adjustment is needed; foreign research costs, still amortized federally, are deducted in full for Indiana.
Is our SaaS taxable in Indiana?
No. Indiana’s bulletin on software says prewritten software that is remotely accessed over the internet, without being downloaded, is not an electronic transfer and not a retail transaction, so the subscription isn’t subject to sales or use tax. Downloaded software is a different answer.
Do we send 1099s to Indiana?
Indiana’s WH-3 reconciles state and county tax withheld and is filed with the W-2s and 1099s that show Indiana withholding. A startup that pays contractors without withholding Indiana tax generally files those 1099s only federally.
Which county tax do we withhold?
The county is fixed on January 1. An Indiana resident pays the rate of the county they lived in on January 1 for the whole year; a nonresident pays the rate of the Indiana county where they worked on January 1. If someone moves from Hamilton County (1.1%) to Marion County (2.02%) in March, you keep withholding at Hamilton’s rate until the next January.
How often do we file the Indiana business entity report?
Every other year for a for-profit corporation, in the anniversary month of its Indiana registration. It can be filed up to 90 days early and costs $31 online or $50 by mail. The Secretary of State sends at least four reminders, and an entity more than five months overdue is administratively dissolved or, for a foreign corporation, has its registration revoked.
Is there an Indiana R&D credit?
Yes. Indiana’s research expense credit, computed on Schedule IT-20REC, works like the federal credit for qualifying research done in Indiana. It is nonrefundable and limited to the adjusted gross income tax, so a pre-revenue company can only carry it forward; the IT-20 instructions require the prior-year schedule to be attached when a carryforward is claimed.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Indiana DOR — Corporate and Sales Tax History
- Indiana DOR — 2025 IT-20 Corporate Income Tax Booklet
- Indiana DOR — Income Tax Information Bulletin #127, Modifications for Specified Research Expenditures (June 2026)
- Indiana DOR — Departmental Notice #1, County Tax Rates (effective Oct 1, 2026)
- Indiana DOR — Rates, Fees & Penalties
- Indiana DOR — Withholding Income
- Indiana DOR — Remote Sellers
- Indiana DOR — Sales Tax Information Bulletin #8, computer software and digital goods
- Indiana DWD — Unemployment Insurance Rate Computation
- Indiana DWD — New Hire Reporting
- Indiana Department of Labor — Minimum Wage Law poster
- Indiana Department of Labor — Wage & Hour
- Indiana Secretary of State — Business Entity Reports
- Indiana Secretary of State — Business Forms (Foreign Registration Statement, State Form 56369)
- Indiana Attorney General — Unclaimed Property
- Worker’s Compensation Board of Indiana
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.