Sales tax is a tax paid on retail purchases of goods and some services in Indiana. The sales tax rate in Indiana varies by county and city, ranging from 5% to 11.5%. As a consumer or business owner in Indiana, it is important to understand how sales tax works in the state.
Indiana Sales Tax Calculator
The Indiana sales tax calculator is an online tool that automatically calculates the sales tax due for purchases made in Indiana. To use the calculator, you simply select the county and city where the purchase is being made from dropdown menus. After selecting the location, you enter the total purchase price. The calculator will then instantly calculate the state and local sales tax rates applicable for that area and display the total sales tax owed.
Indiana Sales Tax Calculator
Indiana Sales Tax Calculator
This eliminates the need to manually look up tax rates and perform sales tax calculations. The Indiana sales tax calculator ensures you pay the correct sales tax no matter where you make purchases in Indiana. It’s a convenient way to estimate the sales tax on an Indiana purchase before going to the register. The calculator provides an easy, fast, and accurate way to calculate Indiana sales tax.
Overview of Indiana Sales Tax
Indiana has a destination-based sales tax system. This means the sales tax rate applied depends on where the product or service is consumed rather than where the sale originated.
- Sales tax rates range from 5% to 11.5% across Indiana
- 7% is the state sales tax rate
- Counties and cities can levy additional taxes up to 5% combined
- Sales tax is collected by retailers on eligible purchases
- Use tax applies for purchases from out-of-state sellers
Some key exemptions include groceries, prescription drugs, and services like healthcare, education, childcare, etc.
Sales Tax Rates across Indiana
As mentioned earlier, actual sales tax rates vary widely across the state depending on the county and city. Here are some examples:
- Floyd County – 7% (no additional county/city taxes)
- Allen County – 7% state tax + 1% county tax
- Marion County/Indianapolis – 7% + 2% county tax + 1% local tax
- Lake County/Gary – 7% + 1% county tax + 3% local taxes
- Porter County/Valparaiso – 7% + 2.25% county + 1.75% local taxes
The Indiana Department of Revenue provides a full list of all sales tax rates across the 92 counties. This will help determine the exact tax that applies to a purchase.
What is Subject to Sales Tax in Indiana?
Sales tax in Indiana applies to the retail sale, lease, or rental of tangible goods and some services. Some examples include:
Goods
- Electronics like TVs, computers, phones
- Furniture, home appliances
- Clothing accessories
- Books, music, arts
- Groceries are exempt
Services
- Utility bills like water, electricity, cable TV
- Hotel rooms and accommodations
- Food and drinks at restaurants and bars
- Admission to recreational/sporting events
- Repair and installation services on goods
Some exemptions for services include healthcare, education, childcare, nonprofits, etc. Check here for a detailed list of taxable services in Indiana.
Who Needs to Collect Indiana Sales Tax?
Any business that sells taxable goods or services in Indiana must register for a Retail Merchant Certificate (RMC) and collect applicable sales tax. This includes:
- Physical stores/outlets in Indiana
- Online stores shipping products to Indiana addresses
- Service providers like restaurants, hotels, etc.
- Marketplace facilitators like Amazon, eBay, etc.
- Sellers exceeding $1,000 in annual revenue
Out-of-state sellers without an Indiana physical presence must also collect sales tax on deliveries into the state. Refer here for more details on registering for sales tax collection.
How Should Sales Tax be Collected?
Retailers should use the following steps to collect Indiana sales tax properly:
- Determine the taxability of products/services being sold
- Identify the destination of the sale to determine appropriate sales tax rate
- Calculate tax by applying the sales tax rate on the total product/service cost
- Collect tax from customers along with product payments
- Report and submit sales tax collected periodically to the state
Sellers can use solutions like AvaTax to automate sales tax calculations and filing. Proper documentation should be maintained for all tax collection and remittance.
What is a Resale Certificate?
A resale certificate is a form used by retailers to purchase inventory from suppliers tax-free that will later be sold to end consumers. By providing a valid resale certificate, retailers assert that items being procured are for resale and exempt from upfront sales tax. Generally, Form ST-105 is used as the resale certificate in Indiana.
Common Sales Tax Exemptions in Indiana
Some key sales tax exemptions offered in Indiana include:
- Food and prescription drugs – Groceries and medicines are exempt from sales tax
- Utilities – Water, sewer services and energy used in manufacturing are not taxed
- Machinery and equipment – Those used directly for manufacturing and agriculture
- Nonprofits – Purchases by qualified religious and charitable organizations
- Out-of-state sales – Goods shipped out of Indiana are not taxed
See the Department of Revenue website for a detailed list of Indiana sales tax exemptions.
Frequently Asked Questions
Q1: What is the use tax in Indiana?
The use tax is levied on purchases made outside Indiana for use within the state. It is equivalent to the sales tax and applies for out-of-state/online purchases.
Q2: Does Indiana tax groceries and medicines?
No, food and prescription drugs are exempt from Indiana sales tax. Non-prescription medicines may be taxable.
Q3: Does Indiana have tax holidays?
Yes, Indiana offers two annual sales tax holidays – one in April for clothing/accessories and another in May for school supplies.
Q4: Is shipping charged taxable in Indiana?
Yes, if shipping charges are included in the price of a taxable product, it is considered part of the taxable amount.
Q5: Are there sales tax filing penalties in Indiana?
Yes, late payments and filings can attract penalties of 10% of tax due and interest of 8% annually.
Conclusion
Indiana has destination-based sales taxes ranging from 5% to 11.5% depending on county and city. Both goods and some services are taxable based on local rates. All sellers doing business in Indiana need to register for tax collection and remittance. Proper documentation should be maintained for sales tax processes. Staying up-to-date on Indiana sales tax laws can help consumers and businesses remain compliant and avoid penalties.
