Key Takeaways

  • Indiana LLCs must file a biennial report with the Secretary of State every two years, with fees ranging from $32 (online) to $50 (paper).
  • Most LLCs are taxed as pass-through entities, meaning income is reported on the members’ personal returns. However, an LLC may elect corporate taxation and pay Indiana’s corporate income tax (currently 4.9%).
  • Employer obligations include withholding employee income tax and paying unemployment insurance (UI) tax through the Indiana Department of Workforce Development.
  • Indiana imposes a 7% sales and use tax, requiring LLCs selling goods to register and remit collected tax.
  • Different business structures use different tax forms (e.g., IT-20 for C-Corps, IT-20S for S-Corps, IT-65 for partnerships).
  • LLC owners should track federal filing requirements (Form 1065, Schedule K-1, or Schedule C for single-member LLCs) to remain compliant.

Indiana corporate income tax is charged on the income of corporations and businesses registered or operating in the state of Indiana. Businesses in Indiana must file an annual tax return. You can deduct business expenses like wages, rent, and costs associated with the sale of goods.

Except for flow-through entities, almost all businesses in Indiana must pay federal and state corporate income taxes. A flow-through entity is one where business income passes through to the owner's personal tax return. Sole proprietorships, partnerships, and S-Corporations are examples of flow-through entities.

C-Corporation is the most common business structure that is subject to corporate taxes. In addition to the corporate income taxes paid by a C-Corporation, the owners, or shareholders, also pay income tax on the distributed income they receive from the company. Thus, profits of a C-Corporation taxed twice.

Since corporate taxes do not apply to flow-through entities like S-Corporations, these businesses are not subject to double taxation. However, the owners must include their share of business income while filing their individual tax returns.

All incorporated businesses in Indiana must file a tax return with the IRS and the state, regardless of whether they are liable for any taxes or not.

Tax Exemptions for Nonprofits in Indiana

Certain nonprofit Indiana entities may qualify for partial or full exemption from paying state and federal income taxes. For example, Indiana exempts certified 501(c) corporations from paying corporate income tax.

These are a few types of 501(c) exempt organizations:

  • Educational institutions, including schools, colleges, and research organizations
  • Labor unions and workers' organizations
  • Religious organizations, including churches, mosques, and synagogues
  • Nonprofit recreational organizations and social clubs
  • Charities (whether religious or non-religious)

In order to get a tax-exempt status in Indiana, you must first qualify under section 501(c) of the IRC and obtain a tax-exempt identity number from the Internal Revenue Service (IRS). You may also have to submit additional papers at the state level.

Indiana LLC Biennial Report Filing

All Indiana LLCs must file a biennial report with the Secretary of State. The report can be filed online through the INBiz portal or by mailing Form 48725 (Business Entity Report). Reports are due every two years in the anniversary month of formation. For example, an LLC formed on June 10, 2024, would have its first biennial report due in June 2026. As of 2023, the fee is $32 for online filings and $50 for paper filings. Failure to file on time may result in late fees and administrative dissolution of the LLC.

IRS Corporate Income Tax Rates

In addition to the state-level corporate tax, Indiana corporations are also liable for federal income tax. Much like the personal tax structure, the federal corporate tax also has a bracketed structure.

However, unlike personal income tax slabs, the federal tax slabs do not have completely progressive rates, meaning that the tax rates do not increase with the income level in all the slabs. Moreover, contrary to the yearly changes in personal income tax brackets, corporate tax brackets stay same for a long period of time.

These are the current corporate tax rates:

  • Between $0 and $50,000: 15 percent
  • Between $50,000 and $75,000: 25 percent
  • Between $75,000 and $100,000: 34 percent
  • Between $100,000 and $335,000: 39 percent
  • Between $335,000 and $10,000,000: 34 percent
  • Between $10,000,000 and $15,000,000: 35 percent
  • Between $15,000,000 and $18,333,333: 38 percent
  • Over $18,333,333: 35 percent

Indiana LLC State Tax Obligations

By default, Indiana LLCs are treated as pass-through entities. Members report their share of profits and losses on personal returns. However, if an LLC elects to be taxed as a corporation by filing IRS Form 2553, it must also pay Indiana’s corporate income tax, which is a flat 4.9% rate. LLCs taxed as corporations are generally required to make quarterly estimated payments using the INTIME system.

Indiana does not impose a franchise tax on LLCs, but other obligations apply:

  • Withholding Tax: Employers must register with the Department of Revenue, file Form WH-1 periodically, and submit annual reconciliations on Form WH-3.
  • Unemployment Insurance (UI) Tax: Employers must register with the Department of Workforce Development through the Uplink Employer Self-Service (ESS) portal and file quarterly wage and UI reports.
  • Sales and Use Tax: LLCs selling goods must collect a 7% sales tax, register through INBiz, and obtain a Registered Retail Merchant Certificate (RRMC). Returns and payments are filed via INTIME.

Indiana Business Income Tax Extensions

You must file your business's tax return in Indiana by April 15. However, you can get an extension for Indiana business income tax in either of the following two ways:

  • Get a six-month business extension from the IRS, and you will be automatically entitled to an Indiana tax extension without having to file a separate request. Your Indiana tax return deadline will be 30 days after the IRS extension deadline.
  • If you don't have an IRS tax extension, or if you need a longer extension than the automatic extension of six months, you must make a request in writing to the Indiana Tax Administration Division before the filing deadline. The extension application must explain why you need the extension and the length of the requested extension. The tax authority will notify you of its decision to approve or reject the extension.

You should mail the application for Indiana business extension to the following address:

Indiana Department of Revenue

Tax Administration Division

100 N. Senate Avenue

Indianapolis, IN 46204-2253

Note that an extension for filing a return is not an extension of time to pay your taxes. You must pay the taxes within the original deadline in order to avoid interest and penalties. If you have paid 90 percent of your business tax on time, obtaining an extension of filing time prevents you from penalty during the period of extension.

Choosing the Proper Indiana Tax Form

The tax form your Indiana business files depends on its entity type:

  • C Corporations: File Form IT-20 (Indiana Corporate Income Tax).
  • S Corporations: File Form IT-20S.
  • Partnerships/LLCs taxed as partnerships: File Form IT-65.
  • Single-Member LLCs: Usually file as sole proprietors using Schedule C with the federal Form 1040, with income then carried into the Indiana individual return (IT-40).

The Indiana Department of Revenue provides guidance on which form to use, ensuring that businesses are compliant with state requirements.

Frequently Asked Questions

  1. Do Indiana LLCs have to file annual reports?
    No, Indiana LLCs file biennial reports (every two years), due in the anniversary month of formation.
  2. What is the corporate income tax rate in Indiana?
    Indiana imposes a flat 4.9% corporate income tax on entities taxed as corporations.
  3. Are LLCs in Indiana subject to a franchise tax?
    No. Indiana does not impose a separate franchise tax on LLCs.
  4. What forms do Indiana businesses use to file taxes?
    C-Corps file IT-20, S-Corps file IT-20S, and partnerships/LLCs file IT-65. Single-member LLCs typically report income on Schedule C.
  5. Do Indiana LLCs need to collect sales tax?
    Yes, if they sell taxable goods or services. LLCs must collect and remit Indiana’s 7% sales tax and obtain a Registered Retail Merchant Certificate.

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