The Indianapolis sales tax is Indiana’s flat 7% state rate, and neither the city nor Marion County adds a general local sales tax on top of it.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-2.5-2-2 That keeps checkout math simple on most retail purchases. The complications show up at restaurants, ticket windows, and rental car counters, where Marion County stacks extra taxes on specific transactions.
The 7% State Rate
Indiana charges 7% of the gross retail price on taxable sales, and the rate applies the same way across the state.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-2.5-2-2 A shirt bought in Broad Ripple carries the same tax percentage as the same shirt bought in Evansville. The rate is set by the state legislature, so the Indianapolis city-county council has no authority to raise or lower it on general retail goods.
Extra Taxes You’ll Hit in Marion County
Three Marion County taxes catch people by surprise because they sit on top of the 7% state rate.
Prepared food and drinks sold for immediate consumption at restaurants, bars, and cafes carry a county food and beverage tax authorized under Indiana Code 6-9-12.2Indiana General Assembly. Indiana Code 6-9-12-5 Rate of Tax Groceries from a supermarket don’t trigger it; the tax kicks in only when the food is prepared for you or sold heated.
Tickets to professional sporting events and entertainment at major Indianapolis venues carry an admissions tax. Indiana Code 6-9-13 sets a 5% base and allowed the city-county council to add up to another 5 percentage points through ordinances adopted in 2005 and 2013.3Indiana General Assembly. Indiana Code Title 6 Taxation 6-9-13-2 The council used that authority, so the effective rate on qualifying events is 10%.
Short-term car rentals also cost more than the sticker rate suggests. Vehicles under 11,000 pounds rented in Marion County for fewer than 30 days face a supplemental auto rental excise tax of 6%.4Indiana Department of Revenue. Miscellaneous Tax Rates That 6% sits on top of the 7% state sales tax and a separate statewide auto rental excise tax.
What’s Taxed and What Isn’t
The 7% tax covers most tangible personal property: electronics, clothing, furniture, and household goods. Most standalone services, like legal or accounting work, are not taxed.
Grocery food is exempt, but the exemption is narrower than most shoppers assume. Candy, soft drinks, dietary supplements, and anything sold heated or mixed by the seller stay taxable.5Indiana General Assembly. Indiana Code 6-2.5-5-20 Food and Food Ingredients for Human Consumption Food sold with eating utensils provided by the seller is taxable too, which is how the state separates grocery items from prepared meals.
Prescription drugs, insulin, oxygen, and blood products are exempt.6Indiana Department of Revenue. Sales Tax Information Bulletin 29 – Sales of Food Over-the-counter medications are generally taxable unless a physician specifically prescribes them.
Digital goods split along a specific line. Digital audio files, digital video, and digital books are taxable when sold for permanent use to an end user.7Indiana Department of Revenue. Sales Tax Information Bulletin 93 Software as a Service is not taxable: accessing software remotely through a browser or app, without downloading it, falls outside the sales tax, and the same goes for prewritten software accessed through cloud computing instead of installed locally.8Indiana General Assembly. Revenue Ruling 2025-02-RST
Use Tax on Out-of-State Purchases
If you buy something from an out-of-state seller that doesn’t collect Indiana sales tax, you owe a use tax at the same 7% rate. Consumers report and pay it using Form ST-115, filed through the Department of Revenue’s INTIME portal.9Indiana Department of Revenue. Sales Tax Forms
It comes up less often than it used to. Out-of-state remote sellers with more than $100,000 in Indiana gross revenue in the current or previous calendar year must collect Indiana sales tax themselves.10Indiana Department of Revenue. Remote Seller Most large online retailers already clear that threshold. Purchases from smaller sellers, catalog companies, or out-of-state private parties still leave the use tax obligation on the buyer.
Registering as a Retail Merchant
Any business making retail sales in Indiana must obtain a Registered Retail Merchant Certificate before collecting sales tax. The statute flatly prohibits retail transactions without one, and the registration fee is $25 per business location.11Indiana General Assembly. Indiana Code 6-2.5-8-1 Registered Retail Merchants Certificate
Registration goes through the Indiana Business Tax Application (Form BT-1), filed online through INBiz. You’ll need your Federal Employer Identification Number, the legal name of your business, the physical address of each location, and personal information for all owners or officers, including Social Security numbers.12Indiana Department of Revenue. Business Tax Application Checklist Having everything in hand before you start keeps an incomplete application from timing out.
Buyers claiming an exemption on a purchase from you must provide a completed General Sales Tax Exemption Certificate (Form ST-105), and you need to keep it on file to support the exempt sale in an audit. If any required field is blank, you’re on the hook for collecting the tax.13Indiana Department of Revenue. General Sales Tax Exemption Certificate A few categories can’t use the ST-105 at all, including nonprofit organizations, and the certificate doesn’t cover vehicles, watercraft, aircraft, utilities, or gasoline.
Filing Deadlines
Registered merchants file returns through the Indiana Taxpayer Information Management Engine (INTIME), which handles return entry, ACH debit or credit card payment, and confirmation receipts.14Indiana Department of Revenue. INTIME
Filing frequency depends on how much tax you collect. Businesses averaging $1,000 or more in monthly tax liability are classified as early filers and must submit returns by the 20th of the following month. Those averaging under $1,000 a month file by the 30th. Annual trust tax returns are due by January 31 of the following year. When a due date lands on a weekend or holiday, it shifts to the next business day.15Indiana Department of Revenue. Filing Deadlines
Indiana gives on-time filers a small collection allowance that partially offsets the cost of acting as a tax collector for the state. It starts at 0.73% of the tax collected for businesses remitting $60,000 or less annually and decreases at higher volumes.
Penalties and Interest
Missing a deadline gets expensive quickly. The Department of Revenue adds a 10% penalty to any tax not paid by its due date.16Indiana General Assembly. 45 25-670 Indiana Administrative Code Unpaid balances also accrue interest, set at 7% annually for the 2026 calendar year.17Indiana Department of Revenue. Departmental Notice 3 – Interest Rates for Calendar Year 2026 The interest rate resets each year based on the average investment yield on state general fund money.
A business that falls behind on monthly filings can take a separate penalty for each missed period. The penalty is calculated on the unpaid amount, so if you’ve missed a deadline, filing and paying what you can right away cuts the penalty proportionally.