The cost of doing business in Indiana is among the lowest in the nation, making it one of the most attractive states for operating a business.
The Indiana Economic Development Corporation has developed comparisons demonstrating just how competitive Indiana's costs are in relation to other states and regions. The reports, available for PDF download at left, compare expenses such as corporate income tax, worker's compensation rates, unemployment insurance, annual wages, and electricity costs.
Indiana is consistently ranked as one of the best states for business by CNBC, Forbes, Chief Executive, and the Tax Foundation.
- The 2012 CNBC rankings list Indiana as the 5th best state for "Business Friendliness", 7th best state for "Cost of Living", 11th best state for "Economy", and 14th for the "Overall Top States for Businesses".
- The 2012 Chief Executive's "Best Place for Business" rankings show Indiana jumping another spot to 5th place nationally from 6th in 2011 and 16th in 2010. Indiana ranks 1st the Midwest making it the only state in the Midwest in this publication's top five states.
- The 2011 Forbes "Best States for Business" rankings list Indiana as the 14th best state for "Cost of Doing Business," making it the 3rd best ranked state in the Midwest.
- The 2012 Tax Foundation "State Business Tax Climate" ranking rates Indiana as the 11th best state in the nation and 1st in the Midwest.
- The 2011 Site Selection magazine "Business Climate" rankings reported Indiana moving to 6th best in the U.S. up from 8th in 2010.
- The 2012 Area Development magazine rated Indiana as the 8th "Top State for Doing Business" in the U.S. In addition, the state ranked 1st in rail and highway accessibility, and in the top 5 in several other categories, including 3rd for states leading in the economic recovery.
Local Tax Rates
Real and personal property tax is assessed at 100 percent of market value. Statewide tax reform occurred in 2008 which significantly cut property taxes and provided permanent protection for both homeowners and businesses. Beginning in 2010, homeowner property taxes were capped at 1 percent of assessed value, and business property taxes were capped at 3 percent of assessed value. The local tax rates listed below are for both real and personal property for the year 2011 payable in 2012. Taxation is charged on each $100 worth of assessed value.
2011 Property Tax Rates
|
District
|
Rate
|
Cities and Towns
|
|
Plymouth (Center Township)
|
2.5969 |
Plymouth (West Township)
|
2.5683 |
| Bremen |
2.2946 |
| Bourbon |
2.6921 |
Argos (Greene Township)
|
2.9041 |
Argos (Walnut Township)
| 2.9180
|
| Culver |
1.1383 |
| LaPaz |
1.6798 |
| Townships |
|
|
Bourbon
|
1.3478 |
Center
| 1.4048
|
German
|
1.2294 |
| Green |
1.4864 |
North
|
1.1713 |
| Polk |
1.3249
|
| Tippecanoe |
1.2734
|
| Union |
0.8294
|
| Walnut |
1.4859
|
| West |
1.4215
|
The median tax rate in Marshall County is 1.45, as compared to 1.95 for all taxing districts in Indiana. Marshall County's tax rate is among the lowest in the state.
Indiana Gross Receipts and Inventory Tax
The state has no gross receipts tax and no inventory tax.
Corporate Income Tax
Indiana's 2012 corporate adjusted gross income tax is calculated at a flat rate of 8.0 percent of adjusted gross income. Adjusted gross income is a company's federal adjusted gross income with certain adjustments. This method of determination simplifies tax calculations for corporations and does not apply to S corporations and nonprofits.
Legislation was approved in early 2010 to reduce this rate 0.5 percent annually starting in 2012 and ending in 2015. This will bring the rate down to 6.5 percent by 2015.
Single-Sales Factor
Indiana is phasing in the single-sales factor for apportioning corporate income tax. Indiana had determined its share of an interstate or international corporation’s taxable income by weighing the Indiana portion of a company’s property and the proportion of its employees in Indiana. The single-sales factor will calculate the Indiana portion based solely on the portion of a company’s sales in Indiana. This change is being phased in and will be complete by 2011.
Sales and Use Tax
Indiana’s Sales and Use Tax is tax is calculated at a rate of 7 percent. In manufacturing, the following are exempt from the sales tax: raw materials, equipment, power, electricity, and utilities. Wholesale sales, items used directly in production, and sales made in interstate commerce are exempt. In addition, the purchase of research and development equipment is exempt from the tax.
Individual Income Tax
Indiana’s personal income tax is 3.4 percent of federal adjusted gross income (with certain exemptions and deductions).
Local CAGIT
1.25 percent resident / 0.25 percent non-resident
In addition to low tax structures resulting in one of the lowest cost states in the nation to operate a business, there are further facts and figures that demonstrate Indiana has cultivated a business environment where companies are poised for success.
Indiana Ranked 3rd in the United States for 2010 GDP Growth
The state Gross Domestic Product grew 4.6% in 2010, which is nearly two times the national rate of 2.6%. Only two states in the nation had a higher growth rate. (U.S. Bureau of Economic Analysis)
AAA Credit Rating
Indiana's fiscal policy has resulted in the top bond rating from all three major credit rating agencies. Only nine states in the nation have such a rating.
A Right-to-Work State
In early 2012, Indiana became the 23rd right-to-work state in the nation, making it the only right-to-work state in the Midwest.