Indiana Sales Tax

The State of Indiana has taken steps in recent years to streamline their sales tax rates and collection, including adoption as a Streamlined Sales Tax State. Because of the process required for determination of sales tax nexus, it is important, if you do business in Indiana, to research what will be required of you.

Indiana Sales Tax Rates

Indiana does not have any local or county sales taxes, so the state-wide rate of 7.00% applies to all applicable purchases to which sales tax must apply. This makes calculation for out-of-state sellers much easier.

Tax Sourcing

Indiana is a Destination-Based Sourcing state. Since there are no local sales taxes, sourcing in Indiana is primarily used to determine if a sale is subject to Indiana tax at all. If the product is delivered to a customer’s address within Indiana, the 7% Indiana tax applies.

Indiana Nexus

Indiana has joined the Streamlined Sales Tax initiative as a full member, acting with a seat on the Governing Board. Because the process of determining nexus in Indiana has changed slightly and because of the impact of the streamlined process, it is recommended that you review the most current requirements on the Indiana Department of Revenue website.

Physical Nexus

You have physical nexus in Indiana if your business:

• Maintains an office, warehouse, or retail store in the state.
• Stores inventory in Indiana (including Amazon FBA).
• Has employees, contractors, or sales representatives working in the state.
• Regularly delivers goods into Indiana using your own company vehicles.

Economic Nexus

As of January 1, 2024, Indiana simplified its threshold to match many other states. For 2026, the rules are:

• Gross Sales: You exceed $100,000 in gross revenue from sales into Indiana in the current or previous calendar year.
• Transaction Count: Repealed. Indiana no longer uses the “200 transactions” rule. Only the revenue amount triggers nexus for remote sellers.

Marketplace Facilitators

Indiana requires marketplace facilitators (Amazon, eBay, Walmart, etc.) to collect and remit the 7% tax on behalf of third-party sellers.

Reporting: If you sell exclusively through a marketplace, you are not required to register for an Indiana permit.

Combined Sales: If you sell on your own site AND a marketplace, your marketplace sales do count toward the $100,000 threshold. If you hit that limit, you must register to collect tax on your direct (website) sales.

What Is Taxable in Indiana

Tangible Goods

Most physical items are taxable at 7.0%.

Exemptions: Unprepared groceries (bread, milk, vegetables), prescription drugs, and certain medical equipment.

Services

Most professional and personal services are not taxable. However, services are taxable if they are “enumerated” or part of a Unitary Transaction:

Lawn Care (2026 Update): As of January 1, 2026, exterior services like lawn care applications are officially exempt from sales tax.

Unitary Transactions: If you sell a taxable good and a non-taxable service together for one price (e.g., “Computer + Setup for $1,000”), the entire $1,000 is taxable. You must itemize the service separately to keep it tax-free.

Shipping and Handling

Delivery and shipping charges are generally taxable in Indiana, regardless of whether they are separately stated on the invoice.

Digital Goods

E-books, digital music, and movies are taxable only if the buyer receives a permanent right to use them. Software as a Service (SaaS) is exempt in Indiana as it is considered a service, not the transfer of tangible property.

Exemptions

Indiana has a number of specific instances in which sales tax is not charged for otherwise standard goods. Most retail goods are subject to the 7% state sales tax, but there are others that are not, including the following tax exemptions:

• Services – The majority of services in Indiana are not subject to sales tax. There are some, however, that may be subject to sales tax including alteration, preparation, or fabrication of a product that will be sold at retail. Another factor to keep in mind is that Indiana is ranked close to last in the country in terms of the services they levy a tax against and has looked at this as a potential growth opportunity for revenue in recent years.
• Groceries – Certain types of groceries are not subject to sales or business tax in the state. These largely include unprepared foods that are not yet ready for consumption, but there are some specific situations you should be aware of. It is recommended that you review the Department of Revenue’s full list.
• Items Sold to Farmers – Some items sold to farmers as part of their routine operations are not subject to sales tax as well.
• Items Sold to Contractors in Construction – Those who work in construction may not pay sales tax on most of the goods used in the construction process. This again is subject to specific restrictions on certain items, so it is best to review the full list.

For the most part, all retail goods purchased by a consumer are subject to sales tax with the few exceptions listed above.

Sales Tax Holidays

Indiana does not have any holidays scheduled for 2026.

Registration and Filing

The State of Indiana has an all-purpose business registration process that includes Sales Tax and Out of State Sales Tax registration on its official website. The form BT-1 is only available online and requires a valid email address. You can download a checklist for what you will need depending on what parts of this application you are completing from the website here as well.

There is a $25 fee to register for a sales or business tax permit in the state. You must also provide an estimated monthly taxable sales volume, what type of business you are, whether you will sell food, beverages, alcoholic beverages, gasoline, cars or trucks, or tobacco, and what location you will be billing from.

To ensure sales and use tax compliance, do the following:

• For Those in State – You can file your Indiana States sales tax collected with Form ST-103 or do it online through the INTax website. When doing this you will need to have all the information related to the taxes collected from your customers in that time period.
• Out of State – Because everyone in the state has the same 7.00% sales tax rate, the method of taxation doesn’t matter as much as tracking those sales and collecting sales tax. For this reason, you must be registered and able to track your eligible Indiana sales and then remit payment accordingly.
• Shipping and Handling – Sales tax rules on shipping vary depending on the method used. For instance, shipping via the US Postal Service is not taxable, but if you ship via UPS or FedEx, it is. Also, if you don’t state the delivery charges separately on your invoices, then you must charge sales tax on the full total including shipping. For more details, see this bulletin.

Filing Frequencies

How often you are required to file your sales tax returns will depend on the volume of remittance you have each period. When you first receive your permit, the state will assign a filing frequency to you based on your estimated annual taxable sales. The following frequencies will apply depending on the totals you provide to the state on your application:

• Annual – Less than $10 due per month
• Net 30 Days – Less Than $1,000 per month
• Net 20 Days – More than $1,000 per month

For those who meet their sales tax compliance deadlines, Indiana will offer a discount as well. The discount varies depending on the size of what was collected. For those collecting less than $60,000 per year, the discount is 0.083%. For those that collect between $60,000 and $600,000 per year, the discount is 0.6%. For those collecting more than $600,000 per year, the discount is 0.3%. It’s important to check with the state before assuming there will be a discount as it is applied based on your specific filing situation.

Deadlines

Monthly Due Dates: The following deadlines apply to those whose sales tax liability in Indiana is more than $1,000 per month. If your liability is less than $1,000 per month, your due date will be the end of the month listed, so payment for January would be due by March 1^st of the same year.

Period	Due Date
January	February 20
February	March 20
March	April 20
April	May 20
May	June 20
June	July 20
July	August 20
August	September 20
September	October 20
October	November 20
November	December 20
December	January 20

Annual: For those businesses with liability less than $10 per month, you will file annually by the end of either January or July depending on your accounting method.

Penalties and Interest

• Late Payment: 10% of the tax due or $5.00, whichever is greater.
• Late Filing (Zero Return): If you file a $0 return late, the penalty is $10 per day (up to $250).
• Interest (2026): For the calendar year 2026, the interest rate for underpayments is 7.0%.

Resources

• Indiana Department of Revenue Sales Tax Resources
• Indiana Department of Revenue FAQs
• INtax Payment Portal for Sales Tax
• New and Small Business Education Center

Indiana Sales Tax Software

Indiana has a relatively straightforward tax system. Thanks to their adoption of many of the Streamlined Sales Tax State agreement components and because of their flat 7.00% sales tax rate and no local taxes, even out of state sellers don’t have to jump through too many hoops. That said, any time you must include a new state in your taxation, it’s a big new step. That’s why a tax calculator and tool like TaxTools, that can help you record, collect and pay the sales tax due on a regular basis by state is such a useful resource. With eCommerce integration and a single interface to manage everything, it is faster and easier than trying to do this manually using state website portals. To learn more about TaxTools, contact us today or sign up on our website to receive a free trial.

Last updated January 2026