An Indiana LLC’s tax filing requirements depend on how the IRS classifies the business and whether it has employees, nonresident members, or taxable sales. Most Indiana LLCs are pass-through entities, so the LLC itself usually owes no income tax but still has to file information returns with the Indiana Department of Revenue, keep a biennial Business Entity Report current with the Secretary of State, and register for sales tax or withholding when those activities apply. Miss any of these, and penalties accrue quickly or the state can administratively dissolve the LLC.
How the IRS Classifies Your LLC
The IRS does not treat an LLC as its own tax category. It looks at how many members you have and assigns a default. A single-member LLC is a “disregarded entity” and files no separate federal return; the owner reports business income and expenses on Schedule C (or Schedule E or F) with their personal Form 1040. A multi-member LLC defaults to partnership status, files an informational Form 1065, and issues each member a Schedule K-1 showing their share of income and deductions.1Internal Revenue Service. Limited Liability Company (LLC)
Neither default creates a federal tax bill at the LLC level. Profits and losses flow through to members, who pay tax on their individual returns. You can override the default by filing Form 8832 to be taxed as a C-corporation or Form 2553 to elect S-corporation status.2Internal Revenue Service. About Form 8832, Entity Classification Election That choice changes which Indiana return you file as well: an S-corp LLC files Form IT-20S, while a partnership-taxed LLC files Form IT-65.
Self-Employment Tax
If your LLC is taxed as a sole proprietorship or partnership, each member’s share of net earnings is subject to self-employment tax on top of regular income tax. The rate is 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare, applied to 92.35 percent of net self-employment income. The Social Security portion caps out at $184,500 of combined wages and self-employment income for 2026.3Social Security Administration. Contribution and Benefit Base Medicare has no cap, and an additional 0.9 percent Medicare surtax hits earnings above $200,000 for single filers or $250,000 for married couples filing jointly. You owe self-employment tax once net self-employment earnings reach $400. Half of what you pay is deductible as an adjustment to gross income on your personal return.
Electing S-corporation status is one way members reduce this cost. Members who work in the business pay themselves a reasonable salary (subject to payroll taxes) and take remaining profits as distributions not subject to self-employment tax. That comes with payroll complexity and IRS scrutiny of whether the salary is actually reasonable.
Indiana Income Tax Filings
Indiana follows the federal pass-through model. The LLC itself generally owes no state income tax, but it still has reporting duties. Multi-member LLCs taxed as partnerships file Form IT-65; those that elected S-corporation status file Form IT-20S.4Indiana Department of Revenue. Current Year Corporate/Partnership Tax Forms Both report each member’s share of income. Partnerships must file IT-65 by the 15th day of the fourth month after the close of the tax year, which is April 15 for calendar-year filers.5Indiana Department of Revenue. Indiana IT-65 Partnership Return Booklet
Single-member LLCs do not file a separate Indiana business return. The owner includes business income on their individual Form IT-40. Indiana’s flat individual adjusted gross income tax rate for 2026 is 2.95 percent, scheduled to drop to 2.90 percent in 2027.6Indiana Department of Revenue. Rates, Fees and Penalties Most Indiana counties also impose their own income tax, collected alongside the state tax on the individual return. Combined state and county rates typically land between 3.5 percent and 6 percent depending on where the member lives.
The Elective Pass-Through Entity Tax
Since 2022, Indiana has offered an elective pass-through entity tax that lets qualifying LLCs pay state income tax at the entity level instead of passing it through. The point is to work around the federal $10,000 cap on state and local tax deductions for individuals: when the LLC pays Indiana tax directly, it becomes a deductible business expense federally, and each member receives a refundable Indiana tax credit for their share.7Indiana Department of Revenue. Pass Through Entity Tax It is voluntary and makes sense mainly for members whose personal SALT payments already exceed the federal cap.
Withholding for Nonresident Members
If any member lives outside Indiana, the LLC must withhold Indiana income tax on that member’s share of distributed or credited income. The LLC becomes directly liable to the state for the tax and must remit it monthly whenever the aggregate exceeds $50.8Indiana General Assembly. Indiana Code Title 6 Taxation 6-3-4-12 Pass-through entities also have to file composite adjusted gross income tax returns on behalf of nonresident owners, with limited exceptions.9Indiana Department of Revenue. Income Tax Information Bulletin 72 Nonresidents here include out-of-state individuals, trusts and estates based elsewhere, and any partnership or corporation not domiciled in Indiana. If every member is an Indiana resident, none of this applies.
Sales Tax Registration and Collection
If your LLC sells tangible goods, digital products, or certain services in Indiana, you need a Registered Retail Merchant’s Certificate before making any taxable sales. You apply through the Department of Revenue and pay a $25 registration fee per business location.10Indiana General Assembly. Indiana Code 6-2.5-8-1 – Registered Retail Merchants Certificate Application Filing Fee You then collect Indiana’s 7 percent sales tax on each taxable transaction and remit it on the schedule the Department assigns.11Indiana General Assembly. Indiana Code Title 6 Taxation 6-2.5-2-2
Remote sellers with gross revenue from Indiana sales exceeding $100,000 in the current or prior calendar year must register and collect too, even without a physical presence in the state.12Indiana Department of Revenue. Remote Seller
Employer Withholding
LLCs with employees must register for Indiana withholding tax, deduct state and county income tax from each employee’s wages, and remit those amounts to the Department of Revenue. Registration takes both a federal Employer Identification Number and an Indiana Taxpayer Identification Number. The state TID is separate from the federal EIN and manages your withholding account through the Department’s online portal.13Indiana Department of Revenue. Withholding Income Withholding registration is also required if the LLC has nonresident shareholders, partners, or beneficiaries receiving distributions, even with no traditional employees.
The Biennial Business Entity Report
Separate from any tax filing, every Indiana LLC must file a Business Entity Report with the Secretary of State every two years. It’s due during the anniversary month of the LLC’s formation and covers the LLC’s name, principal office address, and registered agent.14Indiana General Assembly. Indiana Code 23-0.5-2-13 – Biennial Report Contents Delivery Statement of Change The fee is $32 online through INBiz or $50 on paper.15INBiz. Business Entity Reports Skip it and the Secretary of State can administratively dissolve the LLC, after which the entity can only wind down or apply for reinstatement.16Indiana General Assembly. 5Indiana Department of Revenue. Indiana IT-65 Partnership Return Booklet
A late partnership or S-corporation return draws a penalty of $10 per day up to a maximum of $250. A separate $10 penalty applies to each late Schedule K-1. For returns showing tax due, the late-filing penalty is 10 percent of the unpaid tax.17Indiana Department of Revenue. Fines, Fees and Penalties Those K-1 penalties stack fast for a multi-member LLC, so a return that’s a few weeks late can cost real money. Most Indiana tax filings run through INTIME, the Indiana Taxpayer Information Management Engine, which is the Department of Revenue’s online portal for returns, payments, and account management.18Indiana Department of Revenue. INTIME You’ll need your Indiana Taxpayer Identification Number and a Letter ID from the Department to set up your login. To prepare any return, pull together your federal EIN, your Indiana TID, gross receipts, deductible expenses, and each member’s identifying information for the K-1 schedules. Paper filing is still available, with completed forms mailed to the Department of Revenue in Indianapolis. Electronic filing through INTIME is faster, produces an immediate confirmation number, and reduces processing errors that would otherwise delay your account updates.Penalties for Late Filing
Where and How to File