Indiana’s sales tax rate, applied uniformly across the state, is 7%. Unlike many states, Indiana gives no sales tax authority to cities, counties, or municipalities. That makes Indiana one of the easier states to manage from a compliance standpoint, but errors can still occur even with the flat rate.

Below, we’ll discuss how Indiana’s sales tax rate works, what’s taxable and what isn’t, and what compliance looks like for businesses selling into the state.

Highlights

• Indiana has a single statewide sales tax rate of 7%, with no local sales taxes added by cities or counties.

• Businesses without a physical presence in the state that exceed $100,000 in sales with Indiana buyers in a calendar year are required to register and collect sales tax.

• Exemptions for groceries, prescription drugs, and manufacturing equipment are available but require a valid Indiana exemption certificate from the buyer at the time of purchase.

What is Indiana’s sales tax rate?

Indiana has a statewide sales tax rate of 7%. It’s a single, uniform rate applied across the state. There are no county additions, no city surcharges, and no special district overlays.

How does Indiana’s sales tax rate work?

Indiana taxes tangible personal property retail sales and a defined set of services. Understanding what exactly is taxable and what isn’t can help you avoid surprises later.

These categories are worth knowing before you start collecting sales tax.

Taxable by default

• Tangible personal property sold at retail

• Prewritten (i.e., canned) software, whether delivered physically or electronically

• Meals and food sold at restaurants or prepared food counters

• Utilities, including electricity, gas, and water, when sold to nonexempt buyers

Common exemptions

• Groceries (i.e., unprepared food for home consumption)

• Prescription drugs

• Many agricultural inputs, such as seeds, fertilizer, and livestock feed

• Manufacturing equipment used directly in production

• Sales to qualifying nonprofits and government entities

Exemptions aren’t automatic. Buyers must provide a valid Indiana exemption certificate (Form ST-105) at the time of purchase. As a seller, if you accept a certificate in good faith and it turns out to be invalid, liability typically shifts to the buyer. If you don’t collect a certificate and can’t otherwise support the exemption, the liability generally lands on you.

Economic nexus rules for remote sellers

Indiana applies an economic nexus threshold to remote sellers. If you sell more than $100,000 into Indiana in a calendar year, you’re required to register, collect, and remit Indiana sales tax—even without a physical presence in the state.

What are the local sales tax rates in Indiana (IN)?

There are no local sales taxes in Indiana. Cities, counties, and municipalities can’t impose additional sales tax rates. The statewide 7% rate is the full combined rate everywhere in the state.

What does Indiana’s sales tax rate mean for your business?

If you’re only selling in Indiana, the compliance picture is relatively contained, but businesses do still run into a few common challenges.

Here’s what you need to look out for.

Nexus determination

If you cross Indiana’s $100,000 economic nexus threshold, you’re required to register and begin collecting tax. Companies that do business in Indiana, particularly those that are growing quickly through online sales, can discover they crossed the threshold months earlier. Back liability accrues from the date you crossed the threshold, not the date you registered.

Exemption certificate management

If you sell to other businesses, manufacturers, nonprofits, or government entities, you need valid exemption certificates on file. Indiana Form ST-105 is the standard certificate for many exemptions.

Certificates don’t expire, but they can become invalid if a buyer’s circumstances change. During an audit, you might be asked to provide certificates for any sale on which tax wasn’t collected.

Product taxability

Indiana draws clear, but sometimes nuanced, lines between taxable and exempt goods. Prewritten software is taxable, while custom software is generally not. Prepared food is taxable, but grocery staples are not. Digital products follow their own classification rules.

If you’re selling anything in a gray area, the Indiana Department of Revenue (DOR) offers formal guidance. A letter ruling or general information letter can provide a defensible position before an audit.

Filing frequency

Indiana assigns filing frequency—which might be monthly, quarterly, or annually—based on expected tax liability. Monthly filers typically have returns due by the 20th of the following month.

If your volume changes, you can request a filing frequency change, but you’re still responsible for filing correctly in the meantime. Late filings or payments might trigger penalties and interest, even if you collected the tax properly.

Automating Indiana sales tax

If you’re calculating tax manually, Indiana’s flat rate helps, but complexity increases when you sell across multiple states. Stripe’s sales tax calculator can help make calculations and maintain consistency across jurisdictions.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.