Indiana LLC Tax Guide — State, County & Federal Obligations
Understanding your tax obligations is critical after forming your Indiana LLC. Indiana's tax structure has a unique feature: county income taxes on top of the state rate. Your effective rate depends on which Indiana county you live in. There is no franchise tax or entity-level fee beyond the $32 biennial report. For compliance beyond taxes, see our after-formation guide.
Indiana LLC Tax Summary
| Tax Type | Rate/Amount | Notes |
|---|---|---|
| State income tax | 2.95% flat | On pass-through LLC income (2025 rate) |
| County income tax | 1%-3.38% | Varies by member's county of residence |
| Combined effective rate | 4.05%-6.43% | State + county |
| Franchise tax | None | Indiana doesn't impose one |
| Sales tax | 7% (state) | On tangible personal property |
| Self-employment tax (federal) | 15.3% | On net LLC earnings |
| Federal income tax | 10%-37% | Pass-through on personal return |
How Indiana Taxes LLCs
Indiana follows federal treatment — no separate entity-level tax:
- Single-member LLC: Reported on your Indiana individual return (Form IT-40). Pay 2.95% state + county rate on net LLC income.
- Multi-member LLC: LLC files Indiana Form IT-65 (partnership return). Each member receives a Schedule IN K-1. Members report on their IT-40.
- S-corp election: Pass-through at same rates. Salary subject to withholding.
- C-corp election: Indiana corporate income tax at 4.9% at entity level (Form IT-20).
The County Income Tax Factor
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Get StartedIndiana is unique among states in imposing county-level income taxes. This is NOT optional — every Indiana resident pays their county rate on top of the 2.95% state rate.
Selected county rates (2025):
| County | Rate | Combined (State + County) |
|---|---|---|
| Marion (Indianapolis) | 2.02% | 5.07% |
| Hamilton (Carmel, Fishers) | 1.62% | 4.67% |
| Allen (Fort Wayne) | 1.48% | 4.53% |
| St. Joseph (South Bend) | 1.75% | 4.80% |
| Lake (Gary, Hammond) | 1.50% | 4.55% |
| Hendricks (Plainfield) | 1.50% | 4.55% |
| Vanderburgh (Evansville) | 1.25% | 4.30% |
| Monroe (Bloomington) | 1.345% | 4.395% |
| Jasper | 3.38% | 6.43% |
| Pulaski | 3.13% | 6.18% |
The county tax is based on where the member resides, not where the LLC operates. A member living in Jasper County pays 3.38% county tax regardless of where the LLC conducts business.
State-Level Taxes
State Income Tax — 2.95%
Indiana's flat rate has been declining per scheduled reductions: 3.23% (2023) → 3.15% (2024) → 2.95% (2025+). Pass-through LLC income is taxed at this flat rate on members' individual returns.
No Franchise Tax
Indiana imposes no franchise tax, privilege tax, or minimum entity-level fee on LLCs. The only mandatory recurring payment is the $32 biennial Business Entity Report.
Sales Tax — 7%
Indiana's sales tax is 7% statewide (uniform — no local additions, unlike Colorado's complex system). Register through INtax (intime.dor.in.gov) if selling taxable goods.
Federal Taxes
Federal Tax Obligations
Same as any state — Schedule C, Form 1065, or elected returns. Self-employment tax at 15.3% on net earnings is the biggest federal burden for most Indiana LLC owners.
Tax Elections
S-corp election (Form 2553) can save self-employment tax once income exceeds ~$50,000. Indiana automatically follows federal classification — no separate state election needed.
Quarterly Estimated Taxes
Required if owing $1,000+ in federal or state taxes. Indiana uses Form ES-40 for quarterly payments. Due dates align with federal: April 15, June 15, September 15, January 15.
FAQ
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Get StartedWhat's my total income tax rate on LLC income in Indiana?
2.95% state + your county rate (1%-3.38%) = 4.05%-6.43% for Indiana state/local income tax. Plus federal income tax (10%-37%) and self-employment tax (15.3%).
Is the county tax based on where I live or where my LLC operates?
Where you live. Your county of residence determines your county tax rate, regardless of where the LLC conducts business within Indiana.
Does Indiana have a gross receipts tax?
No. Unlike Ohio (Commercial Activity Tax) or Washington (B&O Tax), Indiana does not impose a gross receipts tax on LLCs.