How to File LLC Taxes in Indiana? (A Complete Guide)
Indiana LLC taxes aren't one-size-fits-all. How your LLC gets taxed depends heavily on its structure — and single-member LLCs are treated completely differently from multi-member ones. Get it wrong, or miss a filing, and you're looking at penalties and a potential loss of good standing.
I've worked with more than 40 Indiana LLC owners on their annual tax obligations over the past five years as a business consultant. What follows is every tax type, rate, and filing form you need to stay compliant — no guesswork required.
Quick Summary
- An LLC with one owner pays an Indiana individual income tax of 3% (tax year 2025) and a 15.3% federal self-employment tax.
- If your commercial LLC sells tangible property in Indiana, it must pay sales tax of 7%.
- All employers in Indiana must pay taxes and obtain unemployment insurance and workers’ compensation.
How Are LLCs Taxed in Indiana?
Indiana taxes your LLC based on how many members it has. A single-member LLC gets taxed like a sole proprietorship. A multi-member LLC gets taxed like a partnership.
Either way, LLCs are pass-through entities by default — profits and losses flow through to the members, who report them on their personal tax returns. The LLC itself doesn't pay federal income tax.
That said, the IRS does allow Indiana LLCs to elect C-corp or S-corp taxation. Those come with different structures and different treatment of adjusted gross income, so they're worth understanding before you assume the default works for you.
State Taxes for Indiana LLCs
The state taxes for Indiana LLCs are based on the following structures:
1. Single-Member LLCs
In Indiana, a single-member LLC is taxed the same way as a sole proprietorship. The owner reports all business income on their personal return and pays income tax to the IRS.
On top of that, you'll owe a 15.3% self-employment tax. I've seen this catch a lot of first-time LLC owners off guard — they budget for income tax but forget about self-employment entirely.
2. Multi-Member LLCs
A multi-member LLC in Indiana with more than one member is treated as a partnership for federal income tax purposes. The partnership itself doesn't pay employer taxes to the government.
Instead, all earnings pass through to each member, who then pays federal income tax on their share — that's the mechanics of LLC pass-through taxation in practice.
3. LLCs Taxed as S-corp
The IRS allows LLCs to be taxed as an S-Corp. Once your LLC qualifies for this elective status, only individual income tax applies.
Here's the real advantage: an LLC with S-corp status can make pre-tax payments to its members that aren't subject to the 15.3% self-employment tax. For higher-earning LLCs, those savings add up fast.
To get S-corp status for your Indiana LLC, file Form 2553 with the IRS. Once approved, you'll use Form 1120-S to report your income tax each year [1].
4. LLCs Taxed as C-corp
LLCs that elect C-corp taxation pay a corporate tax rate of 4.9% on their revenue.
But here's the catch — Indiana LLC members face double taxation. Because corporations also pay taxes on dividend income, that money gets taxed once at the corporate level and again when it's distributed to members.
Federal Taxes for Indiana LLCs
Indiana LLCs are also on the hook for the following federal income taxes:
1. Indiana State Income Tax
LLC and S-corp members pay Indiana state income tax at 3% for tax year 2025, dropping to 2.95% in 2026. Each member files Form IT-40 to report their share of the LLC's earnings [2].
If your LLC chooses to be taxed as a C-corp, each member must also file Form IT-20 to cover their share of Indiana's 4.9% corporate income tax.
2. Federal Self-Employment Tax
Every business owner in Indiana owes federal self-employment and withholding taxes of 15.3%, governed by the Federal Insurance Contributions Act (FICA).
This covers both Medicare and Social Security. It's not optional, and it applies regardless of how much you paid yourself through the business.
Other Taxes
There are other LLC business taxes your Indiana LLC may need to report depending on how you operate.
These taxes include the following:
1. Indiana Sales Tax
If your company sells products or tangible personal property, you're required to register and collect a 7% sales tax.
Registering for a sales license lets you legally conduct retail transactions in Indiana. Once your registration is processed, you'll receive a Registered Retail Merchant Certificate (RRMC) [3].
If you operate out of more than one retail location, each address needs a certificate displayed on-site.
Services generally aren't subject to Indiana sales tax — but there are exceptions. The following services are taxable:
- Renting real estate for fewer than 30 days
- Leasing tangible personal property
- Obtaining licenses for pre-written software
- Cable television services
- Telecommunications services
- Utility services
2. State Employer Taxes
If your LLC has employees, plan for both unemployment insurance taxes and workers' compensation premiums:
Unemployment Insurance (UI)
Indiana UI tax rates run from 0.5% to 7.4% for established employers. New employers in most industries start at a flat 2.5% for their first three years.
Rates shift based on Indiana's broader economic conditions, so don't treat your initial rate as permanent.
Workers' Compensation
Workers' comp covers employees for medical costs and lost wages from work-related injuries.
Your rate depends on what kind of work your LLC does and how many employees are covered. Under Indiana law, any company with even one full- or part-time employee must carry workers' compensation insurance — no exceptions.
"LLC members, independent contractors, and railroad workers are exempted from maintaining workers' compensation in Indiana."
- Dave Bagley, Business Attorney
3. Local Taxes
Some Indiana jurisdictions collect local taxes — admissions taxes, food and beverage taxes, and innkeeper taxes among them.
Your best move is to contact the county clerk's office directly. Local rules vary enough that a quick call can save you a surprise bill later.
4. Industry Taxes
If your company operates in certain sectors, Indiana imposes the following industry taxes:
- Alcoholic Beverage Tax
- Gaming Tax
- Fireworks Tax
- Cigarette/Other Tobacco Tax
- Estate Tax
- Gasoline Use Tax per gallon
- Charity Tax
- Excise Tax on Controlled Substances
- Aircraft Tax
Not sure which industry taxes apply to your LLC? Head to the Indiana Department of Revenue's website — it's the most reliable place to check.
Related Articles:
- Setting Up an LLC in Indiana
- Professional Registered Agent Services in Indiana
- High-Quality LLC Formation Services in Indiana
What Is Tax-Deductible for an LLC in Indiana?
Tax-deductible for an LLC in Indiana includes the renter's deduction, homeowner's residential property tax deduction, homeschool deduction, Indiana's earned income credit, and disability retirement deduction.
Other deductions and credits worth knowing:
- Indiana adoption credit: Indiana taxpayers who claimed a federal adoption credit can receive a state credit equal to 20% of that federal credit, up to $2,500 per eligible child.
- Unified tax credit for the elderly: Individuals 65 or older with less than $10,000 in income can claim this credit at year-end.
- CollegeChoice 529 education savings credit: Contribute to an Indiana529 plan and you can claim a 20% state income tax credit of up to $1,500 per year ($750 if married filing separately).
- Public school educator expense credit: Eligible educators in Indiana public K-12 schools — teachers, librarians, counselors, and principals — can claim up to $100 for qualified classroom supply expenses. That rises to $200 for married couples filing jointly when both spouses qualify.
- Disability retirement deduction: Taxpayers who retire with a disability can claim a maximum deduction of $5,200.
- Property tax exemption: If your LLC uses its property for charitable, educational, religious, or scientific purposes, Indiana's property tax exemptions may apply.
Indiana LLC Tax Filing Deadlines
Indiana LLC members file individual income tax returns by April 15 each year using Form IT-40. Multi-member LLCs filing as partnerships use Form IT-65 — same April 15 deadline.
LLCs taxed as C-corps file Form IT-20 by April 15. S-corp returns on Form IT-20S are due the same day. Indiana automatically grants a seven-month extension to file, but that extension doesn't cover what you owe — you still need to pay by April 15.
FAQs
Does Indiana Have a State Property Tax Rate?
No, Indiana does not have a state property tax rate. However, any property is assessed and taxed according to the market value.
What Goods Are Exempt From Sales and Use Tax in Indiana?
The goods exempt from sales and use tax in Indiana include groceries, medical equipment, public transportation equipment, and all nonprofit transactions.
What Are the Applicable Personal Income Tax Rates in Indiana?
The applicable personal income tax rate in Indiana is 3% for tax year 2025. County income taxes add to this, with rates ranging from 0.5% to 3% depending on the county.
