Indiana sales tax is a 7 percent tax on most goods you buy in the state
Indiana charges 7 percent sales tax on retail purchases. This is the statewide rate that applies everywhere in Indiana. Some counties and cities add their own local sales tax on top of that, so your total rate can be higher depending on where you shop. The tax is collected by the store at checkout and sent to the state.
Sales tax in Indiana applies to tangible goods — things you can touch and take home. Clothing, groceries, electronics, furniture, and gas all have sales tax. Services like haircuts, car repairs, and plumbing do not. Food you eat at a restaurant is taxed, but unprepared food you buy at a grocery store is not.
Key Takeaways
- Indiana's statewide sales tax rate is 7 percent, but your total rate depends on your county and city, which can add 0.25 to 1.5 percent more.
- Sales tax applies to goods like clothing and electronics but not to services like haircuts or car repairs.
- Groceries and unprepared food are not taxed, but prepared food and restaurant meals are.
- The store collects the tax at the register and sends it to Indiana's Department of Revenue.
Local sales tax rates vary by county and city
Indiana allows counties and cities to add their own sales tax on top of the 7 percent state rate. These local rates range from 0.25 to 1.5 percent depending on where you are. Marion County (Indianapolis) adds 1.25 percent, for example, bringing the total to 8.25 percent. Lake County adds 1 percent, making the total 8 percent there.
You can find your exact local rate by entering your address on the Indiana Department of Revenue website or by calling your county assessor's office. The rate can change if you cross into a different county or city, so the tax you pay in one town might be different from the tax in the next one over.
What is and is not taxed in Indiana
Tangible goods are taxed. This includes clothing, shoes, electronics, furniture, appliances, books, toys, and most other items you can hold. Gas and diesel fuel are taxed at the pump. Prepared food — anything cooked or heated for immediate consumption — is taxed, including restaurant meals, deli sandwiches, and hot pizza.
Unprepared food is not taxed. Groceries like bread, milk, eggs, vegetables, and raw meat are tax-free. Services are not taxed. A haircut, dental work, car repair, plumbing, or house cleaning has no sales tax. Prescription medications are not taxed, but over-the-counter drugs and vitamins are.
Digital goods and software have sales tax in Indiana. E-books, streaming subscriptions, and downloaded software are all taxed. Utilities like electricity and natural gas are not taxed.
How sales tax is collected and reported
The store or business collects sales tax from you at the point of sale — usually at checkout. They add the tax to your bill, and you pay the total. The business then holds that tax money and sends it to the Indiana Department of Revenue on a regular schedule, usually monthly or quarterly depending on how much tax they collect.
Businesses must register with the Department of Revenue and get a sales tax permit before they can legally collect tax. They keep records of all sales and tax collected in case the state audits them. If a business fails to collect or send in the tax, the Department of Revenue can fine them or take legal action.
Sales tax on online and out-of-state purchases
If you buy something online from a retailer that has a physical location in Indiana or ships to Indiana regularly, Indiana sales tax applies. Large online retailers like Amazon collect Indiana sales tax on most items shipped to Indiana addresses. Smaller retailers may not, depending on their sales volume and nexus in the state.
If you buy from an out-of-state retailer that does not collect Indiana sales tax, you may owe use tax instead. Use tax is a backup tax that applies to goods you bring into Indiana or have shipped here without sales tax being collected. Most people do not pay use tax voluntarily, but Indiana can assess it if they audit you. The rate is the same as sales tax.
Resale certificates and tax-exempt purchases
If you are a business buying goods to resell, you can use a resale certificate to avoid paying sales tax on your purchase. You give the certificate to the seller, and they do not charge you tax. You will collect tax later when you sell the item to a customer. Resale certificates are only for businesses that are registered with the Department of Revenue.
Certain organizations like nonprofits, schools, and government agencies can buy items tax-free if they have a tax-exempt certificate. Religious organizations may also may have access to. You must have the certificate on file with the seller before you make the purchase.
Frequently Asked Questions
Does Indiana tax groceries?
Unprepared groceries like bread, milk, vegetables, and raw meat are not taxed. Prepared food — anything cooked or ready to eat — is taxed, including deli items, hot pizza, and restaurant meals.
What is the total sales tax rate where I live?
Indiana's statewide rate is 7 percent, plus your local county and city rate. You can find your exact total by entering your address on the Indiana Department of Revenue website or calling your county assessor's office. Rates range from 7.25 to 8.5 percent depending on location.
Do I have to pay sales tax on services?
No. Services like haircuts, car repairs, plumbing, and dental work are not taxed in Indiana. Only tangible goods and prepared food are subject to sales tax.
Do I owe tax on items I buy online?
If the online retailer collects Indiana sales tax, it is included in your price. If they do not collect it, you may owe use tax on the purchase, though most people do not pay it voluntarily. Large retailers typically collect tax automatically.
Can I get a refund of sales tax I already paid?
No. Sales tax is final once you pay it. You cannot get a refund unless the store gives you one as part of a return or exchange. If you overpay due to an error, contact the store where you made the purchase.