Indiana - IN Sales Tax Calculator: User Guide

Indiana, also known as Hoosier State, is a state located in Midwestern and Great Lakes regions of North America, famous for the low cost of living, great universities, amazing people, a flourishing economy, and a favorable business environment. Hence, attracting numerous businesses and startups throughout the year.

So if you are planning to start, relocate, or expand your business in Indiana, you should know how to deal with Indiana Sales Tax. Wherefore, you experts have poured in all of their expertise to bring you a handy Indiana Sales Tax calculator, supported by a comprehensive Sales Tax Calculations guide, to educate you with all the essentials.

Indiana Sales Tax Facts:

• The statewide general sales tax rate in Indiana is 7%.
• Fortunately, no county or city in Indiana levies a local sales tax. However, some counties charge additional tax on food and beverage that ranges between 1% and 2%,
• The sales tax rate in Indiana is lower than 59.6% of US states.
• Prescription drugs and groceries are exempted from Sales Tax.
• Prepared Food is subjected to a special and higher sales tax rate of 9%. Prepared Food includes food and beverages that are packaged, prepared, sold as meals. Moreover, food consumed on or near the premises, as well as food sold through vending machines or street vendors.
• Goods purchased by the companies and individuals for resale, improvement, or as raw materials can be exempted from Sales Tax using Indiana Sales Tax Exemption Form.
• Purchases made online and from out-of-state sales, which are not subjected to Indiana Sales Tax, are supposed to be subjected to Indiana Use Tax of 7%.

How to calculate Sales Tax in Indiana?

Businesses and Sellers involved in the retail sale of taxable tangible personal property and some services, as well as have Nexus in Indiana are required to register for Sales tax. They are required to collect, manage, and remit it to the Indiana Department of Revenue while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
2. Out of State Seller's Eligibility: Out of State Seller is only required to register, collect, and remit the sales tax to the authorities in the state if it falls under the criteria provided by the state.
3. Location and Products or Services: The sales tax rate varies from product to product and location to location, so you must check the sales tax rate applicable to your product according to the product category, county, and city in Indiana.
4. Exemptions: Almost all goods are eligible for sales tax regulation. However, maybe some products that are exempted under Indiana Law. So you should check with Indiana state government as to which goods and services sold in Indiana are subject to sales tax.

To calculate Sales Tax in Indiana, follow the steps below:

Step 1 – Determine your Nexus:

You, as a Business owner, are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Indiana State. And to determine your Nexus in Indiana, you must have any of the following:

• Maintaining a physical location in Indiana, such as office, warehouse, retail store, or other business locations.
• An employee or independent sales representative working for you in Indiana.
• Accepting orders in the state
• Having inventory in Indiana
• Owning property in the state
• Delivering items or goods in Indiana through company-owned vehicles.

Step 2 – Determine the eligibility to collect sales tax as an out-of-state seller:

Out of State Seller is eligible to register, collect and remit sales tax under Indiana Law, if:

1. Having Click-through Nexus.
2. Having Economic Nexus.
3. Having Inventory in the state.
4. Making sales through a marketplace.
5. Selling items in local trade fairs and exhibitions

Step 3 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Indiana, next is to deduce the Sales Tax rate (State) applicable to your product. However, No city or county levy local sales tax, so wherever you go in Indiana State, you will pay the same rate of 7%.

Moreover, Prepared Food is subjected to a special and higher sales tax rate of 9%. Prepared Food includes food and beverages that are packaged, prepared, sold as meals. Moreover, food consumed on or near the premises, as well as food sold through vending machines or street vendors.

Step 4 – Calculate Sales Tax:

As the Sales Tax rate in Indiana is the same, so it is easy to calculate the sales tax amount charged on the product and gross price (amount after-tax) of a product.

Example # 1:

For instance, you sell a Gaming PC on your store in Greenwood, Indiana, having a net cost of $650. The amount of Sales Tax that you have to pay on the Gaming PC would be:

Manual Method:

Net Price (amount before Tax) of a Gaming PC: $650

Total Sales Tax rate: 0.00% (Greenwood) + 0.00% (Johnson County) + 7.00% (Indiana State) = 7.00%

Total Sales Tax amount = $650 x 7.00% = $45.5

Gross Price (Amount after Tax) = 650 + 45.5 = $695.5

So the Sales Tax amount charged on the Gaming PC would be $45.50, raising the gross cost of it to $695.5.

Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

1. Input the $650 Net Price of a Gaming PC as Amount Before Tax
2. Input or select 00% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result, and represents it in 3 different forms, as shown in the image below:

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product, and the Gross Price of the Product.

But there are also instances when you are required to deduce how much Sales tax you have actually paid on a product in Indiana.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Indiana Sales Tax Calculator can perform this calculation like a Pro.

Example:

The gross cost (amount after tax) of a Gaming Laptop is $720, which you sell on your store in Fort Wayne, Indiana. Now, if you want to deduce the amount of sales tax you have actually paid on it and the net cost (amount before tax) of a Gaming Laptop, you can follow the steps below:

Gross Price (Amount after Tax) of Gaming Laptop: $720

Total Sales Tax rate: 0.00% (Fort Wayne) + 0.00% (Allen County) + 7.00% (Indiana State) = 7.00%

Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

720 = [Net Price x ((7/100) + 1)]

720 = Net Price x 1.07

$672.9 = Net Price

So the original Price (net price) of the Gaming Laptop would be $672.9.

Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

1. Input the $720 Gross Price of Gaming Laptop as Amount after Tax
2. Input or select 7.00% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

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