Indiana Sales Tax Rates Penalties and Filing Steps

What Is the Current Sales Tax Rate in Indiana?

Indiana charges a flat 7% state sales tax, and no county or city adds a local sales tax on top, so 7% is the entire rate everywhere in the state. Per the Indiana DOR, the rate has held at 7% since it rose from 6% on April 1, 2008. Most states stack state, county, and city rates, so a rate lookup returns a layered number. In Indiana a lookup returns one number: 7%.

Counties do levy other taxes that businesses confuse with sales tax. Those taxes are separate, and none of them change your 7% sales tax obligation.

Hospitality and restaurant businesses owe CIT or FAB on top of the 7% sales tax. You can find county-by-county FAB and CIT figures on the Indiana DOR county tax information page.

How Does Indiana Use Tax Work?

Indiana use tax is 7% of the purchase price, owed by the buyer directly to the Indiana Department of Revenue whenever a seller did not collect sales tax on a taxable purchase. The use tax rate mirrors the sales tax rate under IC 6-2.5-3-3, and the buyer is personally liable under IC 6-2.5-3-6. Example: Jane, an Indiana resident, buys a $200 dress from an out-of-state seller with no Indiana nexus and owes $14 in use tax (7% of $200).

When Does a Business Owe Indiana Use Tax?

A business owes Indiana use tax whenever it uses taxable property in the state and no Indiana tax was collected at purchase. This is a standard audit line item, unlike consumer use tax, which is rarely enforced. Two scenarios cover most cases.

First, out-of-state purchases. A business buys a $10,000 machine tax-free from an Ohio vendor that does not charge Indiana tax. The business self-remits $700 in Indiana use tax (7% of $10,000).

Second, inventory withdrawal. A retailer buys stock tax-free under a resale exemption, then pulls a $500 display unit for its own use. That withdrawal owes $35 in use tax (7% of $500).

Businesses report use tax on the use tax line of the ST-103 return through INTIME. Individuals instead use Form ST-115 or their annual income tax return, per Indiana DOR guidance.

Do I Need to Collect Sales Tax in Indiana?

You must collect Indiana sales tax if you have physical or economic nexus with the state. Nexus is the connection that gives Indiana authority to require you to collect. You establish it through a physical presence or by crossing a revenue threshold. The two tests below cover which one applies to you.

What Creates Physical Nexus in Indiana?

Any physical presence, permanent or temporary, direct or through an agent, creates physical nexus in Indiana. That includes offices, warehouses, and distribution centers. It also includes a representative performing delivery, sales, installation, order-taking, or repair on your behalf, per Indiana DOR guidance.

Two modern triggers catch ecommerce sellers off guard. Amazon FBA inventory stored in an Indiana fulfillment center creates physical presence the moment it sits in the warehouse, regardless of whether you chose that placement. Sellers verify exposure by pulling Amazon’s Inventory Event Detail report in Seller Central to see which states held their stock.

A remote employee living and working in Indiana generally creates physical nexus. One employee is enough. The employee does not need to perform sales activities. Note that a foreign qualification or Secretary of State filing alone does not create sales tax nexus; the presence of an office, an employee, or inventory does.

What Is Indiana’s Economic Nexus Threshold?

Indiana’s economic nexus threshold is $100,000 in gross revenue from Indiana sales in the current or previous calendar year. It is revenue-only. Indiana repealed the separate 200-transaction test, so revenue is now the sole trigger. Once you cross $100,000, the collection obligation begins and registration should follow promptly.

Many pages still list the retired 200-transaction rule. Ignore it. Facilitated marketplace sales and direct sales both count toward the $100,000 math, per the Indiana DOR remote seller FAQ.

What Are Indiana’s Marketplace Facilitator Rules?

Indiana requires marketplace facilitators with physical or economic nexus to collect and remit Indiana sales tax on behalf of their third-party sellers. A marketplace facilitator is a business that operates a marketplace and processes retail sales between buyers and sellers, online or physical. Amazon, Etsy, and eBay are facilitators, per Indiana DOR guidance.

Do Marketplace-Only Sellers Still Need to Register in Indiana?

A seller whose Indiana sales run entirely through a collecting facilitator may still need its own Registered Retail Merchant Certificate, depending on its total activity, per Indiana DOR marketplace guidance. Two rules are safe regardless of your channel mix.

Direct website sales count toward your own nexus and collection obligation. If you sell through your own site into Indiana, the facilitator does not cover those sales. Facilitated sales still count toward your $100,000 economic nexus math under Indiana DOR’s stated treatment. Confirm your registration status with the Indiana DOR remote seller guidance before assuming a facilitator handles everything.

How Do You Register for an Indiana Sales Tax Permit (RRMC)?

Register with the Indiana DOR for a Registered Retail Merchant Certificate (RRMC) by filing Form BT-1 online through InBiz, Indiana’s business registration portal, with a $25 fee. Multi-state sellers can instead register across states at once through the Streamlined Sales Tax Registration System. You must hold a valid RRMC to collect Indiana sales tax legally.

How Do You File Form BT-1 Through InBiz?

Form BT-1 is a multi-purpose registration that also opens withholding and other tax accounts. Gather your details before you start, then file through InBiz and pay the $25 non-refundable fee.

BT-1 asks for your federal Employer Identification Number (EIN), or Social Security Number (SSN) for sole proprietors, your legal entity type and formation details, your legal and doing-business-as (DBA) names, your physical and mailing addresses, your North American Industry Classification System (NAICS) code, responsible officer or partner names and SSNs, your Indiana business start date, and the tax types you are registering.

Each separate business location needs its own application and its own $25 fee, and each location receives its own RRMC displayed on site. After you file and pay, the DOR issues a tax identification number and the RRMC. Verify current per-location fee mechanics against Indiana DOR before you submit multiple applications.

How Does RRMC Renewal Work?

The RRMC is valid for two years and renews automatically at no additional cost, as long as your account carries no outstanding sales tax liability. Delinquent tax blocks the automatic renewal, and the certificate expires. Operating as a retail merchant without a valid RRMC is unlawful in Indiana.

To stay renewal-eligible, file every return on time, including $0 returns, and pay all balances. If a delinquency has already blocked your renewal, pay the outstanding tax to cure it, then confirm reinstatement through the DOR.

Should You Use Streamlined Sales Tax Registration Instead?

The Streamlined Sales Tax Registration System (SSTRS), at sstregister.org, registers you in every Streamlined Sales Tax full-member state at once, and Indiana is a full member. There is a catch. SSTRS registrants must collect and remit in every selected state, even without nexus there. It fits multi-state sellers, not Indiana-only sellers.

What Are the Steps to Collect Indiana Sales Tax?

Collecting Indiana sales tax takes three steps: determine whether each item is taxable, calculate 7% of the sales price, and collect that tax from the buyer at the point of sale. Tangible personal property is taxable by default in Indiana. On a $100 taxable sale, you collect $7, for a $107 total.

Vehicle dealers file on Form ST-103CAR and follow special rules, so the generic math does not cover them. Monitor taxability changes on the Indiana DOR information bulletins page.

What Is Exempt From Indiana Sales Tax?

Unprepared groceries, prescription medical equipment, and sales to government and qualified nonprofit buyers are the main Indiana exemptions, and sellers must hold a valid exemption certificate for every exempt sale. The categories below consolidate Indiana DOR guidance.

Sellers collect and retain a valid exemption certificate, Form ST-105, for every exempt sale. Auditors request these certificates, and missing them is a leading audit failure point.

Is SaaS Taxable in Indiana?

Indiana does not tax remotely accessed software, or SaaS (software as a service), following the state’s 2018 legislation, but Indiana does tax specified digital products at 7%. Specified digital products under IC 6-2.5 include digital audio works such as music, digital audiovisual works such as movies, and digital books transferred electronically. They are taxable when the buyer receives permanent use or conditional continued-payment use.

Most services stay non-taxable in Indiana. A computer store that sells parts and offers repairs collects tax on the parts, but the repair labor is not taxable. Confirm current treatment on the Indiana DOR information bulletins page.

How Do You File an Indiana Sales Tax Return Online?

You file electronically through INTIME, the Indiana Taxpayer Information Management Engine, using Form ST-103 (ST-103MP and ST-103CAR for special filers). Electronic filing is mandatory. Monthly filing is standard, and merchants collecting under $1,000 per year may file annually, per the Indiana DOR ST-103 instructions.

You must file a return for every assigned period, even with zero taxable sales. Skipped $0 returns trigger the late-filing penalty and jeopardize your RRMC renewal.

File and pay through the INTIME portal, and verify your assigned frequency and due date in your account.

What Is the Penalty for Not Collecting Sales Tax in Indiana?

Late or missing sales tax payments draw a penalty of 10% of the tax due or $5, whichever is greater, plus interest, per the Indiana DOR ST-103 instructions. Unpaid tax also blocks RRMC renewal, so the certificate expires and operating without it becomes unlawful. A seller who fails to collect becomes personally liable for the uncollected tax plus penalty and interest.

Interest accrues on unpaid tax at the annual rate the DOR sets. If you discover past exposure, a Voluntary Disclosure Agreement (VDA) can cap the look-back period and waive penalties, but only before the state contacts you.

Which Other Indiana Taxes Apply on Top of Sales Tax?

Hospitality, restaurant, and certain product sellers owe county or product-specific taxes on top of the 7% sales tax, each with its own registration and deadlines. The taxes below are separate from sales tax and are collected in addition to it.

These taxes carry deadlines separate from your sales tax return, which raises the compliance burden for hospitality and product-specific businesses. Register and file each through InBiz and INTIME as required.

How Do Indiana Sales Tax Audits and Appeals Work?

An Indiana DOR audit tests whether you collected the right tax and kept the right records, and you have 60 days from an assessment to file a written protest. Keep valid exemption certificates, marketplace sales records, and proof of correct-rate collection ready. Those three areas are the most common audit focus.

If you disagree with an assessment, file a written protest within 60 days. The department issues a final determination, and you may then appeal to the Indiana Tax Court. Preparation guidance is in the official Indiana DOR audit manual.

How Commenda Handles Indiana Sales Tax Compliance

Commenda’s global indirect tax software tracks your physical and economic nexus across states, registers you, and files on schedule, so INTIME deadlines and $0 returns never slip. It maps product tax codes correctly, which keeps SaaS, digital products, and exempt categories on the right side of Indiana’s rules.

For threshold references, use the US nexus exposure thresholds guide and the Indiana sales tax state guide. For a quick rate check, use the Commenda sales tax calculator. The calculator finds rates; the nexus guide covers exposure. Commenda connects to 100+ ERP and API integrations, so your compliance runs off your existing systems.

Book a demo at https://www.commenda.io/book-a-demo for a free nexus exposure assessment covering Indiana and every other state you sell into.