Key Takeaways
- Indiana taxes LLC pass-through income at Flat 2.95% state rate, plus a separate county income tax on top
- Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround: Elective; taxed at Indiana's individual rate on the entity's share of Indiana income if made, due Election generally made with the entity's annual return
- Sales Tax: 7.0%
- Business Entity Report due End of the LLC's anniversary month, every 2 years (biennial, not annual), $32 online fee
- Federal self-employment tax of 15.3% applies to net LLC profit regardless of state
- Indiana automatically follows the federal S-Corp election with no separate state approval process, and S-corp-taxed LLCs remain eligible for the elective PTET, just like partnership-taxed multi-member LLCs.
- Same-day formation and compliance filing available through LLC Attorney at no markup on state fees
Indiana's headline 2.95% flat income tax rate only tells half the story — every resident also owes a separate county income tax on top, ranging from about 0.5% to 2.864% depending on where the member lives. There's no franchise tax and no minimum LLC fee, but the stacked state-plus-county structure is the thing most out-of-state owners miss.
This guide covers exactly what an Indiana LLC owes in 2026 — state and county income tax, the biennial Business Entity Report, the elective Pass-Through Entity Tax and its no-credit-for-other-states limitation, and when an S-Corp election is worth the added payroll complexity.
Indiana Personal Income Tax on LLC Profit
By default, an Indiana LLC is a pass-through entity — the LLC itself doesn't pay federal income tax. Profit flows through to the owners' personal returns, taxed once at the federal level, once at Indiana's flat 2.95% state rate, and once more at whatever county rate applies to the member's county of residence.
Indiana's rate: Flat 2.95% state rate, plus a separate county income tax on top
The 2.95% figure is only the state layer. Every Indiana resident also owes a county income tax, ranging roughly 0.5%–2.864% depending on the county, assessed on the same taxable income. The state rate itself is on a legislated step-down path toward 2.9% by 2027, down from 3.00% in 2025.
A 'flat 2.95%' headline understates the real burden for most Indiana LLC owners, since the county add-on is mandatory, not optional, and can meaningfully change the effective rate depending on where the member lives.
Indiana's Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround
Indiana has no franchise tax and no minimum LLC tax — standard LLCs owe nothing at the entity level beyond the Business Entity Report fee. LLCs taxed as partnerships file the informational Form IT-65; single-member LLCs report directly on the owner's IT-40. Only LLCs that affirmatively elect C-corp treatment file Form IT-20 and pay Indiana's 4.9% corporate rate. The one elective entity-level option is the PTET described above, available only to multi-member or S-corp-elected LLCs as a federal SALT-cap workaround.
Indiana has no mandatory franchise tax or minimum LLC tax. The PTET, enacted under SB 2 (2023), is purely optional and available only to partnerships and LLCs taxed as partnerships or S-corps — not to disregarded single-member LLCs. A real limitation: Indiana will not credit PTET paid to other states, which is a genuine trap for multi-state pass-through owners who assume Indiana's PTET works like every other state's.
Indiana Sales Tax
Indiana has one of the simplest sales tax structures of any state — a flat 7.0% rate with no local county or city add-ons anywhere. Most retailers of tangible personal property and specifically enumerated services need to register and collect.
- State rate: 7.0%
- Registration: Registered Retail Merchant Certificate (RRMC) via Form BT-1 or INBiz, $25 per business location fee with the Indiana Department of Revenue (DOR)
- The RRMC is valid for two years with free automatic renewal, and the Department of Revenue assigns filing frequency based on your collection volume.
Indiana Annual Report Requirement
Indiana requires every LLC to file Business Entity Report with the Indiana Secretary of State (INBiz), due End of the LLC's anniversary month, every 2 years (biennial, not annual). Filing fee: $32 online.
Indiana files this report only once every two years, matching the LLC's formation-year parity. Under HB 1593 (effective January 1, 2026), the Secretary of State now accepts filings up to 90 days early, giving owners a wider window to stay ahead of the deadline.
Reinstatement requires filing the delinquent Business Entity Report(s) and paying accumulated fees through INBiz.
Federal Self-Employment Tax and How Your Indiana LLC Is Classified
Regardless of which state you're in, LLC owners who materially participate in the business owe federal self-employment tax — 15.3% on net profit, covering Social Security (up to the $184,500 (2026) wage base) and Medicare (no cap).
Single-Member LLCs
A single-member Indiana LLC defaults to a disregarded entity — you report income and expenses on Schedule C of your personal Form 1040 and compute self-employment tax on Schedule SE. This classification also excludes you from the PTET election.
Multi-Member LLCs
A multi-member Indiana LLC defaults to partnership taxation, filing the informational Form IT-65 and issuing each member a Schedule K-1. This classification is what makes the LLC eligible for the elective PTET SALT-cap workaround.
Should Your Indiana LLC Elect S-Corp Taxation?
An S-Corp election lets you split LLC profit into a reasonable salary (payroll-taxed) and distributions (not subject to self-employment tax), once the business is consistently profitable enough to justify the added payroll complexity.
Indiana's treatment: Indiana automatically follows the federal S-Corp election with no separate state approval process, and S-corp-taxed LLCs remain eligible for the elective PTET, just like partnership-taxed multi-member LLCs.
Indiana's low flat state rate plus mandatory county tax add-on means the core S-Corp calculus is fairly standard federal SE-tax math, but the PTET election (available to S-corp-taxed LLCs) adds a genuine, real-dollar SALT-cap planning opportunity worth flagging to clients who itemize federally — just remember Indiana won't credit PTET paid to other states if the ownership is spread across state lines.
Indiana LLC Tax Costs at a Glance
How to Handle Your Indiana LLC's Taxes
If You Do It Yourself
Step 1 — Get your federal EIN before anything else.
Apply for your EIN for free directly at irs.gov — a purely federal application with no Indiana-specific step.
Step 2 — Confirm your default federal tax classification.
A single-member LLC defaults to a disregarded entity (Schedule C); a multi-member LLC defaults to partnership taxation (Form 1065 plus Schedule K-1 for each member). Neither requires a separate election — this is automatic unless you file Form 8832 or Form 2553 to change it.
Step 3 — Register with the Indiana Department of Revenue (DOR) if required for state income tax withholding or estimated payments.
A 'flat 2.95%' headline understates the real burden for most Indiana LLC owners, since the county add-on is mandatory, not optional, and can meaningfully change the effective rate depending on where the member lives.
Step 4 — Register for sales tax if you sell taxable goods or services.
File Registered Retail Merchant Certificate (RRMC) via Form BT-1 or INBiz with the Indiana Department of Revenue (DOR) at in.gov/dor (INBiz / INTIME), $25 per business location fee. The RRMC is valid for two years with free automatic renewal, and the Department of Revenue assigns filing frequency based on your collection volume.
Step 5 — Register for payroll/reemployment tax the moment you hire your first employee.
The moment you hire your first employee, register with the Indiana Department of Workforce Development. The 2026 new-employer UI rate is 2.5%, applied to a taxable wage base of $9,500 — one of the lowest wage bases among neighboring states, meaning the maximum UI cost per employee at the new-employer rate is roughly $237.50 per year.
Step 6 — Set up quarterly estimated tax payments.
If you expect to owe $1,000 or more in combined federal and Indiana tax for the year, both the IRS and Indiana DOR expect quarterly estimated payments covering state income tax, county income tax, and federal self-employment tax on your LLC profit.
Step 7 — Calendar your Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround due date.
Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround (Form IT-65 (informational, for partnership-taxed LLCs) with the PTET election) is due Election generally made with the entity's annual return, Elective; taxed at Indiana's individual rate on the entity's share of Indiana income if made. Missing it puts your LLC in bad standing with the Indiana Department of Revenue (DOR).
Step 8 — File your Business Entity Report every Indiana deadline.
Business Entity Report is due End of the LLC's anniversary month, every 2 years (biennial, not annual) with the Indiana Secretary of State (INBiz), $32 online fee.
Step 8 — Decide whether an S-Corp election makes sense once your LLC is consistently profitable.
Indiana's low flat state rate plus mandatory county tax add-on means the core S-Corp calculus is fairly standard federal SE-tax math, but the PTET election (available to S-corp-taxed LLCs) adds a genuine, real-dollar SALT-cap planning opportunity worth flagging to clients who itemize federally — just remember Indiana won't credit PTET paid to other states if the ownership is spread across state lines.
Step 9 — Watch for Indiana-specific tax traps.
The stacked state-plus-county income tax is the main thing out-of-staters miss — a 'flat 2.95%' headline rate understates the real burden once the mandatory county layer is added. The PTET's no-credit-for-other-states'-PTET rule is a second, more subtle trap for multi-state pass-through owners who assume Indiana's PTET works like other states' reciprocal credit systems.
Step 10 — Keep business and personal finances completely separate.
Commingling funds is the single biggest reason courts pierce the LLC liability shield, and it also makes tax preparation far more error-prone. Run all business income and expenses through a dedicated business bank account and keep receipts.
If LLC Attorney Does It for You
- Submit your information at llcattorney.com — entity classification, expected revenue, and whether you'll be hiring employees or collecting sales tax.
- LLC Attorney obtains your EIN, registers you with the Indiana Department of Revenue (DOR) and Indiana Department of Revenue (DOR) as needed, and sets up your compliance calendar for Business Entity Report and Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround.
- Receive reminders before every deadline through your client portal, plus access to flat-fee attorney consultations (no retainer) when an S-Corp election or multi-state question needs a licensed professional's judgment call.
When Should You Talk to a Tax Professional About Your Indiana LLC?
A CPA is worth consulting in Indiana specifically to confirm the correct county tax rate for each member's county of residence, to evaluate whether the PTET election makes sense given its no-credit-for-other-states rule, or to decide whether your profit level justifies an S-Corp election.
Is Indiana a State Where Tax Complexity Matters More?
Indiana's stacked state-plus-county income tax structure, combined with a PTET election that doesn't credit other states' PTET, makes Indiana's real tax picture more layered than the flat state rate alone suggests — especially for multi-member LLCs with owners spread across counties or states.
What You Actually Get With LLC Attorney's Indiana Compliance Service
A flat state rate that ignores the mandatory county layer isn't the full picture — and neither is a PTET election made without knowing it won't credit tax paid to other states. LLC Attorney's Indiana service is built to catch both.
- EIN obtained for you at no extra charge.
- State tax and sales tax registration handled as part of formation, starting at $49.
- An ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) tracks every Indiana deadline — Business Entity Report, Pass-Through Entity Tax (PTET) — elective, SALT-cap workaround, and registered agent renewal.
- Access to professionally trained Business Success Advisors at no charge, plus flat-fee attorney consultations (no retainer) for S-Corp election analysis and multi-state nexus questions.
Indiana rewards LLCs that plan around the full county-plus-state tax picture, not just the flat headline rate — LLC Attorney keeps your Indiana compliance and election decisions grounded in the real numbers.
Get Your Indiana LLC's Taxes Set Up Correctly
Getting your EIN, tax registrations, and compliance calendar right from day one prevents expensive corrections later. LLC Attorney's Indiana formation service starts at $49, and an ongoing compliance subscription (available through an ongoing compliance subscription — contact LLC Attorney for current pricing) keeps you ahead of every deadline after that. See our full pricing for all service tiers.
Frequently Asked Questions
No. Indiana has no franchise tax or minimum LLC tax. Your recurring state-level obligation is the Business Entity Report ($32 online), filed every two years rather than annually. Indiana does offer an elective Pass-Through Entity Tax as a federal SALT-cap workaround, but it's optional, not a mandatory franchise-style tax.
Only if you sell taxable tangible personal property or enumerated services. Register through INBiz for a Registered Retail Merchant Certificate ($25 per location), then collect the flat 7.0% rate — Indiana has no local sales tax add-ons anywhere in the state.
Indiana LLCs file a Business Entity Report with the Secretary of State every two years, due by the end of your LLC's anniversary month, for $32 online. As of 2026, you can file up to 90 days early under HB 1593.
Reinstatement after a missed Business Entity Report requires filing the delinquent report(s) and paying accumulated fees through INBiz. Because filing is biennial rather than annual, it's especially easy to lose track of the correct filing year — confirm your LLC's specific due year if you're unsure.
It depends on your profit level. Indiana's low flat state rate plus mandatory county tax means the core calculus is standard federal SE-tax math, but S-corp-taxed LLCs also become eligible for Indiana's elective PTET — a real SALT-cap planning tool, though it won't credit PTET paid to other states.
A single-member Indiana LLC defaults to a disregarded entity for federal tax purposes — you report income on Schedule C and pay self-employment tax via Schedule SE. Indiana adds its flat 2.95% state tax plus your county's income tax rate on top. Single-member LLCs cannot make the PTET election.
If your LLC does business in a state other than the one it's formed in — an office, employees, inventory, or significant sales there — you may have created nexus requiring registration and tax obligations in that state too. This is fact-specific and worth a conversation with a tax professional if you operate in multiple states, especially given Indiana's PTET doesn't credit other states' PTET.
For a typical Indiana LLC with in-state owners and no employees: a flat 2.95% state income tax plus a county income tax (0.5%–2.864% depending on county) on your share of profit, no franchise tax, just the biennial $32 Business Entity Report, plus federal income tax and 15.3% federal self-employment tax (up to the $184,500 Social Security wage base for 2026). Add 7.0% sales tax only if you sell taxable goods or services.
Yes. LLC Attorney's ongoing compliance subscription tracks your Indiana filing deadlines, handles your Business Entity Report, and connects you with flat-fee attorney consultations (no retainer) when a tax question needs a licensed professional's judgment call.