Indiana Sales Tax and Invoicing Rules for 2026

State sales tax rate

Indiana levies a 7% state sales and use tax with no local additions. The rate is identical everywhere in the state — Indianapolis, Fort Wayne, Evansville, and all other locations.

This makes Indiana one of the simplest states for sales tax compliance. The 7% rate is one of the higher flat state rates in the country.

Indiana uses destination-based sourcing as a Streamlined Sales Tax member state.

Nexus rules

Physical nexus applies through offices, employees, inventory, or property in Indiana.

Economic nexus triggers at $100,000 in gross revenue from Indiana sales OR 200 or more separate transactions in the current or prior calendar year. Either threshold creates nexus.

Marketplace facilitators must collect and remit on behalf of third-party sellers. Indiana is a full member of the Streamlined Sales Tax (SST) agreement, and registration is available through the SST system for simplified multi-state compliance.

Invoice requirements

The Indiana Department of Revenue (DOR) requires sellers to maintain records of all sales. Invoices should include:

• Seller's name, address, and registered retail merchant certificate number
• Date of transaction
• Buyer information
• Description of goods or services
• Quantity and price
• Tax amount (shown separately)
• Total

For exempt sales, retain the buyer's Streamlined Sales Tax Certificate of Exemption (Form ST-105) or the General Sales Tax Exemption Certificate. Records must be maintained for at least three years from the date the return was due or filed.

Exemptions and special cases

Groceries (food for human consumption) are exempt from sales tax. Prescription drugs and medical equipment are exempt.

Manufacturing equipment directly used in the production process qualifies for exemption. Agricultural products and farm machinery are exempt for qualifying purchasers.

Clothing is fully taxable at 7%. SaaS is generally not taxable in Indiana — the state taxes tangible personal property and does not broadly classify cloud-based software as taxable. However, prewritten software delivered electronically is taxable.

Digital goods (e-books, music, video downloads) are taxable under Indiana's specified digital products provisions.

Filing frequency and deadlines

Indiana assigns filing frequency:

• Monthly — most businesses
• Quarterly — smaller sellers
• Annually — very small sellers

Monthly returns are due the 20th of the following month (the 30th for returns filed through INtax). Quarterly returns are due the last day of the month following the quarter. Annual returns are due January 31.

Indiana provides a vendor collection allowance — retailers may retain a portion of the tax collected as compensation. Electronic filing through INtax is standard.

Penalties for non-compliance

Late filing incurs a 10% penalty on unpaid tax. Interest accrues at the rate established by the DOR.

Failure to obtain a Registered Retail Merchant Certificate before selling is an infraction. Back-assessments with penalties apply when nexus existed but the seller did not register. Indiana participates in SST audit programs and information sharing.

FAQ

Is the rate really 7% everywhere in Indiana?

Yes. Indiana has a uniform 7% rate with no local additions. No city, county, or district in Indiana adds additional sales tax. This makes rate determination trivial compared to states with local variations.

Are digital downloads taxable in Indiana?

Yes, specified digital products (e-books, digital music, streaming video, digital photographs) are taxable in Indiana. However, SaaS accessed through a browser without downloading is generally not taxable. The distinction matters.

Can I register through the Streamlined Sales Tax system?

Yes. Indiana is a full SST member. You can register through the Streamlined Sales Tax Registration System to simultaneously register in Indiana and other SST states, simplifying multi-state compliance.

Verify Indiana's 7% rate and others with InvoiceQuickly's tax rate lookup.

Step-by-step: register and start collecting in Indiana

1. Confirm nexus — physical presence (office, employee, inventory) creates nexus immediately. Otherwise, watch annual gross revenue from Indiana sales; $100,000 in a calendar year triggers economic nexus (note: the 200-transaction threshold was repealed in 2024, so revenue is the only test now).
2. Register through INBiz — Indiana's unified business portal handles sales tax registration alongside business entity registration. Sales tax certificates issue within 5–7 business days at no fee.
3. Configure for the flat 7% — Indiana is one of the simplest states because there are no local sales taxes; every taxable sale is 7% statewide. Set this once in your invoicing tool; no ZIP-based logic needed.
4. Set up exemption documentation — collect Form ST-105 (General Sales Tax Exemption Certificate) for resellers, manufacturers, and other exempt buyers. Indiana exemption certificates don't expire but should be refreshed every 3–5 years for audit hygiene.
5. File on schedule — Indiana assigns monthly, quarterly, or annual filing based on tax liability. File electronically via INTIME (Indiana Taxpayer Information Management Engine). Returns are due on the 30th of the month following the period.

Real Indiana compliance situations

• A Bloomington bakery sells both prepared food (taxable) and unprepared baked goods sold for off-premises consumption (exempt as groceries). Itemizing each line on customer receipts is critical — auditors look for lump-sum invoices that hide the breakdown.
• An Indianapolis-based SaaS provider pays Indiana sales tax on software delivered remotely. They collect tax from Indiana customers and remit monthly. The flat 7% makes their tax engine simple compared to neighboring Ohio's local-rate complexity.
• A drop-shipper in Carmel ships products to Indiana customers from out-of-state warehouses. Once they crossed $100K in Indiana revenue, they registered, integrated ST-105 exemption capture for B2B buyers, and added the 7% flat rate to all B2C orders.

More Indiana FAQs

Is shipping taxable in Indiana? Generally yes if the item is taxable, even when separately stated. Indiana is one of the states that treats shipping as part of the sale price for tax purposes when the freight is necessary to complete the sale.

Are clothing and groceries taxed in Indiana? Clothing is fully taxable at the 7% rate. Groceries (unprepared food) are exempt. Prepared food, candy, and soft drinks are taxable. The grocery exemption is one of Indiana's largest revenue offsets.

Does Indiana have any sales tax holidays? Indiana does not have an annual back-to-school sales tax holiday. Some states do; Indiana has consistently declined to enact one, citing revenue stability.

What's the audit focus in Indiana? The DOR tends to focus on use-tax accruals (purchases from out-of-state vendors that didn't charge IN tax) and exemption-certificate discipline. Out-of-state contractors who used materials in Indiana without paying tax are common audit targets.