Taxes

Indiana Corporate Income Taxes

Corporations doing business in Indiana are subject to three different state income taxes.  While the taxpayer makes three different tax computations, basically two of the three taxes are paid.  The amount due is the gross income tax plus the amount (if any) of adjusted gross income tax that exceeds the gross income tax plus the supplemental net income tax.

The Corporate Adjusted Gross Income Tax rate is 8.5%.  Currently the apportionment of corporate income tax in Indiana is based on equal parts of sales (destination), property, and payroll.  In 1994, a two year phased-in double weighted sales factor apportionment began.  Corporations pay the greater of the adjusted gross income tax or the gross income tax.

The Corporate Gross Income Tax is a levied tax on the gross receipts of corporations doing business in Indiana.  A rate of 0.3% is imposed on retail merchants and manufacturers,  A rate of 1.2% is imposed on utilities and services.  Receipts from the sale of goods in interstate commerce are not taxable under the corporate gross income tax.  Subchapter S corporations are exempt from this tax.

A 4.5% Supplemental Net Income Tax is imposed on corporations and domestic insurers.  Net income for purposes of supplemental net income tax is adjusted gross income derived from Indiana sources minus the greater of the adjusted gross income tax or the gross income tax.  Special provisions apply to domestic insurance companies.

The term "net income" is the same as adjusted gross income under Indiana's Corporate Adjusted Gross Income Tax Act, including the add-back of all state income taxes (taxes based on income), property taxes paid and charitable contributions.  Federal Accelerated Cost Recovery (ACRS) is available for property placed in service after January 1, 1982.  Numerous credits are available to Indiana corporations such as research credits, enterprise zone, and industrial recovery credits.  Indiana allows deductions of most foreign source income from the supplemental net and corporate adjusted gross base before computation of the tax.

Indiana Unemployment Tax

Employers pay unemployment tax on the first $7,000 of an employees wages.  For new employees, the rate is approximately 2.7%.  The Rate for experienced employees averages about 1.7%.  The minimum rate is 0.2% and the maximum rate is 5.5%.


Indiana Workers Compensation Tax

The average rate for manufacturing is $1.85 per $100 of Indiana payroll.

  
Indiana Sales and Use Tax

Purchasers of tangible personal property, public utility services, renters of room or other accommodations for less that 30 days, and renters of other property pay a 6% sales tax on the sales price of the taxable transaction.

Exemptions include wholesale sales; purchases of items used directly in the production process, including raw materials, machinery, tools and equipment directly used production; any sale of goods for resale; sales made in interstate commerce; power, electricity, and gas if 51% of the load is used for manufacturing; pollution abatement equipment if required by federal, state, or local law; and, sales to government entities.  Generally food, not including such items as candy, soft drinks or restaurant meals, and prescription drugs are also exempt.

Local Property Taxes - City of Greencastle

  • Real Estate:  2005 Gross Rate - Payable 2006:                      $2.6650
  • 2005 Net Rate, after State Credit - Payable 2006:                  $1.9684
  • (Per $100 of Assessed Valuation; Assessed Value is approximately 100% of value.

The property tax is an ad valorem levy on all tangible property (land, buildings, and personal property) at rates varying according to the needs of the local taxing units and their assessed valuation. Land and buildings are assessed at 100% of True Tax Value as of the last general real property assessment.  The True Tax Value is similar to market value with some adjustments.

  • Personal Property:  2005 Gross Rate - Payable 2006:           $2.6650
  • 2005 Net Rate, After State Credit - Payable 2006:                  $2.2535
  • (Per $100 of Assessed Valuation; Assessed Value is based on the depreciated value value of the personal property)

Personal property is assessed annually.  Personal property is subject to depreciation schedules.  Most inventory destined for out of state shipment is exempt from property taxes.

Real and Personal Property Tax Abatement

Property Tax Abatement is authorized under Indiana Code 6-1.1-12.1 in the form of deductions from assessed valuation.  Any property owner in a locally designated Economic Revitalization Area who makes improvements to the real property or installs new manufacturing equipment is eligible for property tax abatement.  Land does not qualify for abatement.  Used manufacturing equipment can also qualify as long as such equipment is new to the state of Indiana.  Equipment not used in direct production, such as office equipment or distribution equipment, does not qualify for abatement.

Since July 1, 2000,  tax abatement can be granted on a one to ten year declining percentage schedule on real property improvements such as buildings.

Personal property tax abatement is a declining percentage of the assessed value of the newly installed manufacturing equipment, based on a one to ten year time period and percentages as determined by the local governing body. 

Also, since July 1, 2000, tax abatement changes now allow local units of government to grant tax abatement on research and development equipment from 1 to 10 years.

Legislation is being considered in the current session of the state legislature to amend the laws governing tax abatement to permit abatement on distribution equipment and information technology equipment.


Disclaimer

This business tax information is provided for general information purposes only and not as legal or accounting advice.  The Development Center obtained the information above from various government and private sources and assumes no responsibility for incorrect information.  Because each business situation is unique, persons are advised to consult their accountant, tax attorney, or other professional to discuss their situation.