Indiana has a flat state sales tax rate of 7% with no additional local taxes except for a tax on prepared food and beverages in some municipalities. Read on to learn everything else you need to know to stay compliant.
Whether a sale occurs in or ships to Indianapolis, Fort Wayne, or a rural county line, Indiana taxes it at 7%.
Groceries and prescription drugs are broadly exempt, but not every food purchase escapes tax entirely. Several counties and cities add a separate 1% or 2% tax on prepared food and drinks.
The most common ways businesses establish nexus are a physical connection to Indiana or gross revenue from Indiana sales exceeding $100,000 in the current or prior calendar year. Indiana dropped its 200-transaction threshold back in 2024.
Businesses remit sales tax through INTIME, Indiana's online tax portal. They file on the schedule the Department of Revenue assigns.
What gets tricky in Indiana isn't the rate; it's how they tax software. Remotely accessed SaaS and downloaded prewritten software follow two entirely different rules, with SaaS not being taxed while downloaded prewritten software is.
Keep reading to learn more about Indiana sales tax, including rates, what is taxed, how nexus works, and business obligations to stay compliant.
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Indiana has a single 7% statewide sales tax rate. No county, city, or special district is allowed to add its own general sales tax on top of it.
The one exception is that several counties and municipalities impose a separate local food and beverage tax, typically 1% or 2%, on prepared food and drinks sold within their borders.
Multiply the taxable sale amount by 7%. A $100 taxable sale anywhere in Indiana carries $7 in sales tax.
In some cases, the seller and the buyer are in different areas of Indiana, or a seller is outside Indiana but selling to a buyer in Indiana. In these situations, you must determine if the buyer’s or the seller's sales tax rules apply.
This is called sourcing. Indiana sources retail sales to the destination, consistent with the Streamlined Sales and Use Tax Agreement.
Because the rate is identical statewide, destination sourcing doesn't change what a business owes on a sale. However, it still matters for things like the local food and beverage tax and for keeping Indiana's own sourcing rules consistent with its Streamlined membership.
Yes. Indiana has been a full member of the Streamlined Sales and Use Tax Agreement since October 1, 2005, one of the longer-standing members in the program. Remote sellers can register through the Streamlined Sales Tax system to cover Indiana, along with other member states, at the same time.
Nexus means you have enough connections with a state that the state can require you to collect sales tax on its behalf.
Before 2018, states couldn’t require out-of-state sellers to charge the state sales tax on online purchases. In South Dakota v. Wayfair, Inc., the U.S. Supreme Court overturned that precedent, and states with a sales tax began setting nexus thresholds.
Physical and economic nexus are the two that matter for businesses selling into Indiana.
States each have their own nexus threshold, but generally, a business has physical nexus if it has a physical presence in the state, such as an office, warehouse, employees, or inventory.
Economic nexus means an out-of-state business meets the dollar limit or transaction limit or both required for charging sales tax to customers in that state.
Remote sellers have economic nexus in Indiana when they exceed $100,000 in gross revenue from Indiana sales in the current or prior calendar year. Indiana eliminated its 200-transaction backup test on January 1, 2024, so only the dollar figure counts now.
Marketplace-facilitated sales are excluded from a remote seller's own nexus calculation when the facilitator is the one responsible for collecting Indiana tax on those sales.
That means a marketplace-only seller generally doesn't need to register in Indiana solely because the platform already handles those sales.
Once the threshold is crossed through direct sales, though, registration should happen before the next taxable sale.
Indiana draws a line between software you access remotely and software you actually download, and the two get taxed differently.
Our Indiana SaaS sales tax guide walks through the distinction in more depth.
Digital products shouldn't get lumped in with the SaaS discussion, because Indiana taxes them under their own rule. Electronically transferred products are taxable only when they fall into specific categories: specified digital products, prewritten software, or telecommunications services.
Specified digital products cover things like digital audio, audiovisual works, and digital books, the kind of permanent, one-time digital purchase that's different from a SaaS subscription.
Indiana buyers use Form ST-105, the General Sales Tax Exemption Certificate, to purchase for resale or another exempt purpose.
The form has no fixed expiration date, but it's only valid while the buyer's Registered Retail Merchant Certificate or exemption status stays active, so buyers need their Registered Retail Merchant Certificate number to claim resale.
Out-of-state buyers can use ST-105 with their home state's tax ID or the Streamlined Certificate of Exemption. Keep certificates for at least three years.
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Indiana calls its permit a Registered Retail Merchant Certificate, issued after registering through the INBiz portal, the state's online business registration system. There's a $25 fee per registered location, nonrefundable regardless of the outcome, and paper applications are no longer accepted.
Have your EIN or SSN, business address, owner and officer details, and NAICS code ready. There's no separate local sales tax registration. Businesses selling food and beverages in a county or city with a food and beverage tax add that registration through the same process.
A Registered Retail Merchant Certificate is valid for two years, and the Department of Revenue renews it automatically at no cost as long as the business is current on its returns and payments. It must be displayed at each business location, as in most other states.
Remote sellers register through that same INBiz process once Indiana sales cross the $100,000 threshold. Collection should begin with the next taxable sale after the threshold is crossed, not after registration paperwork clears, so it's worth registering as soon as the number is in sight rather than waiting.
Remote sellers can also register through the Streamlined Sales Tax Registration System instead of INBiz.
With a flat statewide rate, collecting Indiana sales tax is about as simple as it gets. Confirm the sale is taxable, apply 7%, collect it at checkout, and keep the record for the return.
Marketplace facilitators whose own and facilitated sales into Indiana clear $100,000 must register and collect on behalf of their third-party sellers. Those facilitated sales count toward a seller's own economic nexus calculation.
However, direct sales made outside the marketplace, through a seller's own site, still count and still need to be collected on.
A seller with inventory sitting in an Indiana fulfillment center has physical nexus regardless of how the marketplace handles tax on facilitated sales, so it's worth tracking inventory locations separately from the sales channel.
Delivery and shipping charges are generally taxable in Indiana when they're tied to a taxable sale, whether or not the charge is broken out separately on the invoice.
Selling a mix of taxable and exempt items in one order means you should prorate the shipping charge between the two, with tax applying only to the portion tied to the taxable goods.
Two exceptions: separately stated U.S. Postal Service postage isn't taxable, and neither is a delivery charge billed directly to the customer by a third-party carrier.
The Department of Revenue assigns a filing frequency, generally monthly or annual, based on a business's tax liability, and returns get filed through INTIME. Returns are typically due the 20th of the month following the reporting period, though businesses with lower annual liability may be assigned the 30th instead.
Zero returns are still required in periods with no taxable sales. Indiana offers a small collection allowance for on-time filers, applied automatically when a return is filed and paid by the due date.
All Indiana sales tax returns are filed electronically through INTIME, which replaced the state's older INtax system. Registration, filing, and payment all live in the same portal.
Our guide to filing Indiana sales tax walks through the process step by step.
A late return or late payment carries a penalty of 10% of the tax due, or $5, whichever is greater. A late zero return draws its own penalty of $10 per day the return is overdue, capped at $250, and a bounced payment brings a flat $35 fee on top of everything else.
Interest accrues on unpaid tax from the original due date at a rate the Department of Revenue sets annually; the underpayment rate for 2026 is 7%. Fraud carries a separate penalty of 100% of the underpayment, on top of whatever tax was actually owed.
Businesses should keep sales records, exemption certificates, and returns on file to support what they reported, since the Department of Revenue can audit a business to verify taxability calls, exemptions claimed, and whether the correct amount got collected and remitted.
Indiana requires records to be kept for at least three years after the tax was due, or indefinitely if a return was never filed.
A business has 60 days from a proposed assessment to file a written protest with the Department, and that deadline can't be extended. If the Department's Letter of Findings still doesn't resolve things, the next step is an appeal to the Indiana Tax Court within 90 days.
A flat 7% rate makes the math easy, but the real risk in Indiana is in software taxability and in knowing exactly when marketplace sales count toward nexus and when they don't.
Numeral's nexus monitoring tracks sales against the $100,000 threshold automatically, correctly excluding marketplace-facilitated sales where a platform is already collecting.
Once nexus applies, Numeral manages registration through INBiz and files and remits taxes on schedule. Exception certificate management keeps ST-105 exemption paperwork organized and current in case a certificate needs to be re-verified.
A U.S.-based expert reviews every filing before it goes out, backed by the Numeral Guarantee: your sales tax will be filed on time, or we'll pay your penalties and interest charges.
Get started with Numeral to put Indiana compliance on autopilot.
What is the sales tax rate in Indiana?
A flat 7% statewide. No county or city adds a general local sales tax on top of it, though some jurisdictions add a separate local tax on prepared food and beverages.
What is the economic nexus threshold in Indiana?
$100,000 in gross revenue from sales into Indiana in the current or previous calendar year. There's no separate transaction-count threshold anymore.
Are services taxable in Indiana?
Most services are exempt from sales tax unless they involve transferring tangible personal property or fall into a short list of taxable categories, like telecommunications.
Is SaaS taxable in Indiana?
SaaS is not taxable in Indiana when customers access the software online without taking possession of it. Prewritten software that customers download is usually taxable.
Are digital products taxable in Indiana?
Yes, when they qualify as specified digital products, like digital audio, video, or books, or as prewritten software or telecommunications services.
Does Indiana charge sales tax on shipping and delivery?
Yes, generally, when the charge is tied to a taxable sale. Separately stated U.S. Postal Service postage and delivery billed directly by a third-party carrier are exempt.
Do I need a sales tax permit in Indiana?
Yes, once physical or economic nexus applies. Registration happens online through INBiz for a Registered Retail Merchant Certificate.
Do marketplace sellers need to collect sales tax in Indiana?
Not on sales a marketplace facilitator already collects above Indiana's threshold. Those facilitated sales are also excluded from the seller's own nexus calculation, though direct sales still count and still need to be collected on.
How often do businesses need to file sales tax returns in Indiana?
Monthly or annually, generally, based on the tax liability the Department of Revenue assigns after registration.
Are groceries and clothing taxable in Indiana?
Groceries for home or off-premises consumption are exempt, though prepared food is taxable. Clothing has no exemption and is taxed like any other retail good.
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