Indiana Excise Laws: Sales Hours, Tax Rates, and Penalties

Indiana’s excise laws, codified in Title 7.1 of the Indiana Code and enforced by the Indiana Alcohol and Tobacco Commission (ATC), set the hours alcohol can be sold, the per-gallon tax rates producers pay, and the criminal and administrative penalties that follow a violation. The rules run from a 7:00 a.m. opening bell for on-premise sales to felony exposure when a sale to a minor causes serious injury, with a separate federal penalty schedule layered on top of tobacco sales.

When Alcohol Can Be Sold

On-premise alcohol sales at bars, restaurants, and similar establishments are lawful every day from 7:00 a.m. until 3:00 a.m. the following day, Monday through Sunday.¹ That window is the same on weekdays, Saturdays, and Sundays for drinks consumed on the premises.

Carryout runs on a tighter schedule. Monday through Saturday, carryout sales are permitted from 7:00 a.m. to 3:00 a.m. the next day. Sunday carryout is limited to noon through 8:00 p.m.¹ Indiana only legalized Sunday retail sales in 2018, and the compressed Sunday hours reflect that history.

Outside those windows, the licensed premises must stop alcohol service to the extent the business allows. A hotel restaurant can still serve food after 3:00 a.m., but the taps have to close.² A sale made during a prohibited hour is a Class B misdemeanor.

State Excise Tax Rates

Indiana imposes excise taxes on alcoholic beverages at the point of manufacture or first sale within the state. The per-gallon rates are:

Beer and flavored malt beverages: $0.115 per gallon³
Wine under 21% ABV: $0.47 per gallon⁴
Liquor and beverages over 21% ABV: $2.68 per gallon

State excise tax is separate from the federal excise tax the Alcohol and Tobacco Tax and Trade Bureau (TTB) collects. Federal rates vary by product type and production volume. Producers with annual federal excise tax liability of $1,000 or less can file annually, those owing up to $50,000 file quarterly, and larger operations file semi-monthly.⁵

Minimum Age for Alcohol and Tobacco

You must be 21 to purchase or consume alcohol in Indiana. The tobacco purchase age is also 21, raised nationwide by federal law in December 2019 and enforced by the FDA through undercover buy inspections at retail locations across the state.⁶

Criminal Penalties for Alcohol Violations

Selling or Furnishing to a Minor

A first offense of selling alcohol to someone under 21 is a Class B misdemeanor, punishable by up to 180 days in jail and a fine of up to $1,000. With a prior conviction for the same offense, it becomes a Class A misdemeanor, carrying up to one year in jail and up to $5,000 in fines. If the minor’s consumption causes serious bodily injury or death, the charge is a Level 6 felony, which can mean six months to two and a half years of incarceration and fines up to $10,000.⁷

Renting property or arranging a space where you know minors will drink is a Class C infraction. A repeat offense within five years becomes a Class B misdemeanor.⁷

Selling Outside Legal Hours

A sale during a prohibited hour is a Class B misdemeanor: up to 180 days in jail and up to $1,000 in fines.²

Selling Without a Permit

Selling alcohol without a valid permit is a Class C infraction on the first offense, which carries a fine but no jail time. A second offense within five years is elevated to a Class B misdemeanor.⁸

Administrative Penalties from the ATC

Criminal charges are only one track. The ATC can also fine a permit holder and suspend or revoke the permit itself. Under commission regulations, maximum administrative fines run to $1,000 for most standard retail permits, $2,000 for wholesalers, and up to $4,000 for brewers and distillers. The amounts apply per violation, and the commission has discretion within the schedule based on the circumstances.⁹

For a first violation involving a minor, the commission can fine the permit holder and suspend the permit for up to three days. On a second minor-related violation within twelve months, it can impose a larger fine, a longer suspension, or revoke the permit. Any penalty beyond a fine and a fifteen-day suspension for a repeat offense requires written findings explaining why the harsher penalty is necessary.¹⁰ Employee permit holders face the same range of consequences, including revocation.

The commission’s investigative powers back all of this up. The ATC and its representatives can hold hearings, subpoena witnesses and documents, administer oaths, take testimony, and conduct investigations with or without a formal hearing.¹¹ Enforcement officers conduct routine inspections of licensed establishments and run compliance checks in which underage individuals attempt purchases. A failed check produces both a criminal charge against the seller and administrative action against the permit.

Federal Tobacco Penalties

Federal civil money penalties for retailers caught selling tobacco to underage buyers escalate with each violation:

First violation: warning letter, no fine
Second violation within 12 months: up to $365
Third violation within 24 months: up to $727
Fourth violation within 24 months: up to $2,920
Fifth violation within 36 months: up to $7,300
Sixth violation within 48 months: up to $14,602

The maximum penalty for any single violation of federal tobacco law is $21,903.⁶ The FDA’s undercover buy inspections proceed without the inspector or the underage purchaser identifying themselves. A single failed check can generate both state and federal consequences.

Defenses to Alcohol Violations

Indiana law recognizes several defenses. The most commonly invoked is the fake-ID defense in underage sales cases. If a business can show that the buyer presented a false or fraudulent identification card and the seller reasonably relied on it, that can defeat both a criminal charge and an administrative penalty. How well the defense works depends on the specifics: whether the seller actually examined the ID, whether the establishment uses electronic verification, and whether the fake was convincing enough that a reasonable person would have been fooled.

Procedural defenses also apply. If an enforcement officer failed to follow proper procedures during an inspection, or if evidence was obtained improperly, a permit holder can challenge the resulting charges. The commission’s own rules require written findings of fact and conclusions before certain penalty thresholds for minor-related violations can be crossed, which gives permit holders a procedural safeguard against disproportionate punishment.¹⁰

A documented employee training program does not create automatic immunity, but it demonstrates good-faith compliance that the commission weighs in penalty decisions. Records of training dates, employee certifications, and ID-check procedures can be the difference between a warning and a suspension.

1
Indiana General Assembly. Indiana Code 7.1-3-1-14 – Times When Sales Lawful; Athletic or Sports Events
2
Indiana General Assembly. Indiana Code 7.1-5-10-1 – Times When Sales Unlawful
3
Indiana General Assembly. Indiana Code 7.1-4-2-1 – Rate of Tax
4
Indiana General Assembly. Indiana Code 7.1-4-4-1 – Rate of Tax
5
Alcohol and Tobacco Tax and Trade Bureau. Due Dates for Tax Returns
6
Food and Drug Administration. Advisory and Enforcement Actions Against Industry for Selling Tobacco Products to Underage Purchasers
7
Indiana General Assembly. Indiana Code 7.1-5-7-8 – Sale to Minors Prohibited; Furnishing to Minors
8
Indiana General Assembly. Indiana Code 7.1-5-6-3 – Acting Without Permit; Defenses
9
Legal Information Institute. 905 IAC 2-2-4 – Schedule of Fines and Penalties
10
Indiana General Assembly. Indiana Code 7.1-3-23-26.1 – Violations Related to Minors
11
Indiana General Assembly. Indiana Code 7.1-2-3-4 – General Powers of Commission