Operating a business in Indiana requires a solid understanding of the state's tax framework. The base state sales tax rate is 7%, with local jurisdictions adding up to 0%. LLC formation costs $95 in 2026.
Economic Nexus in Indiana
Remote sellers must collect Indiana sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2019-10-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Indiana Department of Revenue enforces these provisions and provides registration guidance at https://www.in.gov/dor.
LLC Formation in Indiana (2026)
Forming an LLC in Indiana costs $95 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $31. Indiana imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Indiana Department of Revenue.
Key Tax Rules
• Indiana has a flat 7% state sales tax with no local additions.
• The uniform rate simplifies compliance for businesses operating statewide.
• Groceries and prescription drugs are exempt.
• Economic nexus: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Indiana: groceries, prescription drugs, medical devices, manufacturing equipment. Businesses should maintain proper documentation for exempt transactions.