Zero local taxes, zero grace period
At 7%, Indiana has one of the highest flat sales tax rates in the country. Most states bury you in local tax rates — Indiana doesn't. But what it lacks in local complexity, it makes up for with an aggressive stance on digital products and SaaS.
Indiana sales tax rate table
| Field | Value |
|---|---|
| State base rate | 7.0% |
| Average combined rate | 7.0% |
| Local add-on range | 0% — no local taxes |
| Maximum combined rate | 7.0% |
| Rates vary by county/city | No |
| Sourcing | Destination-based |
$100,000 — and no cushion once you cross it
Indiana expects you to register and collect the moment you exceed $100,000 in gross sales. The state eliminated its 200-transaction rule in early 2024 — now only revenue matters.
- Marketplace sales count toward your $100,000, though the marketplace remits the tax for those.
- Hit $100,000 on a Tuesday? You need to register and start collecting on Wednesday.
SaaS is deeply taxable — no exceptions
Indiana does not care if you sell to enterprise businesses or everyday consumers. If you deliver software electronically, you collect tax.
| Product / service | Tax treatment |
|---|---|
| SaaS (B2B and B2C) | Taxable at 7% |
| Downloaded software (permanent license) | Taxable at 7% |
| Streaming / subscription software | Taxable at 7% |
| Digital goods (e-books, music, video) | Taxable at 7% |
| Cloud storage / hosting | Taxable at 7% |
| Custom software / data analysis (services) | Generally exempt |
The distinction: selling access to prewritten software (downloaded, streamed, or subscription) is taxable. Building custom software from scratch for one client is usually a service and escapes tax.
Product taxability in Indiana
| Product category | Tax treatment |
|---|---|
| Groceries & unprepared food | Exempt |
| Prepared food & restaurant meals | Taxable at 7% |
| Candy & soft drinks | Taxable at 7% |
| Clothing & apparel | Taxable at 7% — no exemption |
| Prescription drugs | Exempt |
| Manufacturing machinery & equipment | Exempt |
| Lawn care / pest control application (2026) | Nontaxable |
Indiana taxes all clothing and footwear — no exemption like many other states offer.
Indiana does not offer sales tax holidays
The flat 7% rate applies year-round to all taxable goods and services.
Filing and registration
Register through the INBiz portal. Free, 1 to 2 business days.
| Frequency | Assigned when… |
|---|---|
| Monthly | Average liability $1,000+/month |
| Quarterly | Under $1,000/month |
| Annual | Typically under $100/month |
Returns due the 20th of the month following the reporting period.
- Late filing/payment: 10% each
- Interest: ~7% annually
No vendor discount.
Not sure which of these apply to you?
We map your Indiana exposure — the immediate registration rule, digital goods classification — and tell you exactly what to do next.
Not home-rule — a full SST member
Indiana is not a home-rule state — every taxable sale gets the same 7% rate, no local registrations needed. Indiana is a full SST member, letting you use certified service providers at no cost.
Voluntary Disclosure Agreement (VDA)
Indiana offers a formal VDA program directly or through the MTC. Lookback typically 3 years (vs. 4-year standard). Penalties waived; interest owed. Process takes 60-90 days.
Audit risk in Indiana
Indiana takes enforcement seriously, especially around software. Common triggers: high exempt sales without documentation, treating SaaS as nontaxable, late registration after crossing $100,000. Statute of limitations: 3 years standard; unlimited for fraud or non-filers.
Recent changes & quirky rules
Eliminated in early 2024 — now only the $100,000 revenue mark matters.
Home exterior application services like fertilizer and pest control no longer collect sales tax on labor.
Exemptions & resale certificates
Indiana accepts Form ST-105 or the SST Uniform Exemption Certificate. Blanket, don't technically expire (update every few years). Common exemptions: resale, manufacturing (direct-use production), agriculture, government.
Your next step: get clear on Indiana compliance
- Past $100,000? You're legally required to collect right now.
- Selling software or digital products? You almost certainly need to tax it.
- Behind on compliance? A VDA wipes out penalties, but interest keeps ticking.
