In addition, the purchase of research and development equipment is exempt from the tax. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. Indiana’s Sales and Use Tax is calculated at a rate of 7 percent. In manufacturing, the following are exempt from the sales tax: raw materials, equipment, and utilities. The single sales factor calculates the Indiana portion based solely on the portion of a company’s sales in Indiana.
Since 2011, Indiana has used the single-sales factor for apportioning corporate income tax. Indiana’s applied Corporate Income Tax rate is being cut from 8 percent to 4.9 percent by July 2021 through 0.5 percent per year reductions that began in July 2012. The current corporate tax rate is 6 percent. This method of determination simplifies tax calculations for corporations and does not apply to S corporations and not-for-profit organizations. Adjusted gross income is a company’s federal adjusted gross income with certain adjustments. Indiana’s Corporate Adjusted Gross Income Tax is calculated as a flat percentage of the company’s adjusted gross income attributable to the company’s Indiana sales. To determine Indiana’s share of an interstate or international corporation’s taxable income, a company’s adjusted gross income is apportioned based upon a single-sales factor with Indiana’s portion based solely on the portion of the company’s sales in Indiana.
