Taxes

Business experts agree: Indiana offers one of the country’s best tax climates

Locate in Orange County and take advantage of Indiana’s business-friendly tax structure.

  • “A” rating for tax climate (Conexus)
  • 11th lowest state in personal taxes (The Tax Foundation)
  • 14th lowest state for overall tax rating (The Tax Foundation)
  • Forbes ranked Indiana the best in the Midwest for cost of doing business, and 6th nationally. (Forbes Best States for Business Index, 2008)
  • Chief Executive Magazine ranked Indiana best in the Midwest and 8th nationally for doing business. (Chief Executive Magazine, January 2008).

These pro-business exemptions and credits can help create success for your company:

  • Tax exemption on income derived from qualified utility and plant patents
  • A new state R&D sales tax credit on research and development equipment
  • Indiana portion of a corporations’ taxable income based solely on a company’s sales in Indiana (phased in by 2011)
  • No gross receipts tax
  • No inventory tax
  • Exemption of raw materials, equipment, and utility costs from the sales and use tax

State Taxes

Indiana’s innovative tax structure is considered one of the most pro-business in the country

With Indiana’s wide range of business-driven tax calculations, exemptions and credits, it’s no surprise that Indiana is widely regarded as one of the most business-friendly states in the country.

Corporate Income Tax

  • Flat 8.5 percent tax rate on adjusted gross income (AGI)
  • AGI is a company’s federal adjusted income less certain adjustments
  • Simplifies corporate tax calculation (does not apply to S corporations or not-for-profit organizations)

Single-Sales Factor (statewide implementation by 2011)

  • Calculates Indiana’s portion of an interstate/international corporation’s taxable income based solely on the portion of a company’s sales in Indiana
  • Reduces the Indiana tax burden for interstate/international corporations

Sales and Use Tax

  • Rate of 7 percent
  • Manufacturing exemptions:
    • Raw materials
    • Equipment
    • Power
    • Electricity and other utilities
  • General exemptions:
    • Wholesale items
    • Items used directly in production
    • Sales made in interstate commerce
    • Research and development equipment purchases

Property Tax

  • Real and personal property tax assessed at 100 percent of market value
  • Tax rates and exemptions vary among local jurisdictions.

Research and Development Tax Credit (aka Research Expense Tax Credit)

  • Based on the increase in Indiana R&D over the prior three-year base
  • Base year expenses must be at least 50 percent of research expenses in current year
  • Up to 15 percent credit on qualified research expenses on the first $1 million of investment
  • Credit applied against income tax liability (carried forward for 15 years before 2008; 10 years beginning in 2008)
  • Operates under the Department of Revenue
  • Uses “qualified research expense” as defined by the Internal Revenue Code (includes cost of wages and supplies)

Patent Income Exemption

  • 50 percent exemption on patent income for each of the first 5 years for qualified taxpayers
  • Additional, decreasing exemption levels in years 6-10
  • Total exemptions claimed cannot exceed $5 million per year
  • Available only to companies with 500 or fewer employees

Individual Income Tax

  • 3.4 percent of federal adjusted gross income (with certain exemptions and deductions)

Unemployment Insurance

  • Employers pay into the fund based upon statutorily determined rate schedules
  • Minimum tax rate is 1.1%; average rate is 2.71%
  • New employers tax rate of 2.7%; experienced rate determined after 3 years based on losses occurred
  • Taxable wage base is $7,000
  • More information at the Indiana Unemployment Insurance Employer Handbook.

Worker’s Compensation

  • Employers must have insurance, whether through a private company or self-insurance.
  • Injury compensation awards statutorily established by the General Assembly
  • Indiana’s Worker’s Compensation Board has the authority to review all claims for worker’s compensation
  • More information at the Worker’s Compensation Board at http://www.IN.gov.

Property Taxes

Indiana’s aggregate property taxes are the lowest in the Midwest

Minimize the impact of property taxes when you pick a location in Orange County. Indiana has the 7th lowest aggregate property tax rate in the country, and the lowest in the Midwest. In the index developed by the Tax Foundation to compare states’ property taxes, we score a 6.27-substantially better than the U.S. average of 5.00.

PROPERTY TAX INDEX (2009)
State Score Rank
Indiana 6.27 7
Illinois 4.02 41
Iowa 4.48 33
Kentucky 5.43 20
Michigan 5.16 25
Minnesota 5.79 17
Mississippi 4.89 29
Ohio 3.55 46
Wisconsin 4.58 31
United States 5.00

Source: The Tax Foundation, 2009.
http://www.taxfoundation.org/publications/show/24377.html The “Score” is a measure how each state’s tax laws affect economic performance. The higher the score, the more favorable a state’s tax system is for business. All scores are for fiscal years.

 

Orange County also boasts low local taxes. The following table shows the local township’s rate of taxation on each $100.00 worth of real and personal property.

ORANGE COUNTY TAX RATES (2009)
Township Total County Rates Total Township Rates Total School Rates Total Library Rates Total Corporation Tax Total Rates
FL Twp. 0.3342 0.0148 0.9612 0.1138 1.5201
GNF Twp. 0.3342 0.0510 0.6421 1.1234
Jack Twp. 0.3342 0.0380 0.9612 0.0521 1.4616
NE Twp. 0.3342 0.0333 0.7546 1.2182
NW Twp. 0.3342 0.0708 0.9612 0.0521 1.5144
Org. Twp. 0.3342 0.0340 0.7546  — 1.2189
Orl. Twp. 0.3342 0.0043 0.7546 0.0425 1.2317
Paoli Twp. 0.3342 0.0269 0.6421 0.1442 1.2435
SE Twp. 0.3342 0.0224 0.6421 1.0948
St. Ck. Twp. 0.3342 0.0380 0.6421 1.1104
FL Town 0.3342 0.0148 0.9612 0.1138 0.5598 2.0220
Orl. Town 0.3342 0.0043 0.7546 0.0425 0.4323 1.6061
Paoli Town 0.3342 0.0269 0.6421 0.1442 0.4727 1.6583
WB Town 0.3342 0.0148 0.9612 0.1138 0.6936 2.3560

Source: Sandy Hill, Treasurer, Orange County, Indiana