Cost of Doing Business in East Central Indiana
• Indiana ranks 9th overall in Area Development magazine’s Top States for Doing Business survey
• Indiana ranks 7th in the nation in Business Facilities’ 2018 State Rankings Report
• Indiana ranks 1st in the Midwest and 5th in the nation in Chief Executive magazine’s annual Best & Worst States survey (May 2018)
A Right-to-Work State
On February 1, 2012 Indiana became the 23rd state in the nation and the first state in the Midwest to pass right-to-work legislation.
AAA Credit Rating
Indiana is one of only 15 states to earn the top bond rating from all three major credit rating agencies (S&P, Fitch, Moody’s).
Indiana ranks 1st in the Midwest and 10th nationally in the Tax Foundation’s 2019 State Business Tax Climate Index (2018).
Corporate Income Tax Reduction
Indiana’s corporate income tax rate is 5.75%. It will be reduced to 4.9% by 2021.
Single Sales Factor
Indiana is a single-factor apportionment state. For corporations with income from within and outside Indiana, corporate income tax is based solely on Indiana sales.
Personal Income Tax Reduction
Indiana’s personal income tax rate is 3.23%.
There is no inventory tax in the state of Indiana.
Indiana’s sales tax is calculated at a rate of 7 percent.
Sales Tax Exemption
The state of Indiana allows sales tax exemptions for the following:
The following are exempt from the sales tax: raw materials, equipment, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. To the extent that computer hardware will be used directly in the production of another product, its purchase is exempt from tax pursuant to the manufacturing exemption. To claim the exemption, the purchaser must show that the computer has an immediate effect on the article being produced as the result of being an essential and integral part of the production process. With respect to computers, this is known as computer-assisted manufacturing (CAM).
For companies engaged in public transportation, the following qualifies for sales tax exemption: vehicles used to escort vehicles used in public transportation; items used to disassemble, load and secure the customer’s machinery for movement in public transportation; items used in planning transportation routes and obtaining travel permits.
Research and Development
The exemption for research and development equipment applies only to equipment purchased for the purpose of research and development activities. Research and development activities include any activities devoted directly to experimental or laboratory research and development for new products, new uses of existing products, or improving or testing existing products.
Certain income derived from qualified patents and earned by a taxpayer are exempt from taxation. The Tax Exemption for Patent-derived Income defines qualified patents to include only utility patents and plant patents. The total amount of exemptions claimed by a taxpayer in a taxable year may not exceed $5 million.
Workers Compensation Rates
The Oregon Department of Consumer and Business Services report that is published once every two years shows the 2014 median value of workers’ comp premiums paid was $1.85 per $100 of payroll, a drop of 2 percent from the $1.88 median in the 2012 study. Indiana’s rate of $1.06 is the second lowest workers compensation rate.
Source: Tax Policy Center, 2017 Rates
|New Employer Rate %||2.50%|
Local Income Tax
Local income tax varies by county within the region and is a combination of county adjusted gross income taxes (CAGIT), county economic development income taxes (CEDIT), and county option income taxes (COIT) with an overall average of 1.773%.
Real and personal property tax is assessed at 100 percent of market value. Tax rates and exemptions vary among local jurisdictions, but are capped at 3 percent for business property pursuant to state law.