State Sales Tax Rates

State Sales Tax Rates Indiana State Sales Tax 2014

Indiana Sales Tax 2014
Indiana State Sales Tax for 2014 Maximum Municipal Sales Tax

7.00%

2.00%

What is the Indiana Sales Tax?

The Indiana state sales tax is 7%, with a maximum possible sales tax (including local and municipal sales taxes) of 9%.

Local governments in Indiana are allowed to add a local sales tax of up to 2 percent on top of the IN state sales tax for all qualifying sales in their jurisdiction - so the actual sales tax paid on any purchase in Indiana can be up to 9% depending on location.

Indiana recently raised the state sales tax from 6% to 7% in order to offset reduced property taxes statewide, and allows counties and cities to granularly set local sales taxes on the purchase of certain goods or services such as restaurants. Certain items are also exempt from sales tax statewide, such as water, icem groceries, and fruit juices in addition to most medecines. Most local sales tax revenue is used to expand local tourism and economic development projects.

What sales are exempt from the Indiana Sales Tax?

Indiana Sales and Use Tax Rates

Many states set special sales tax rates for certain types of goods like groceries or clothes, and may completely exempt certain transactions from state and local sales taxes. Indiana completely exempts unprepared food and groceries, and prescription drugs from the Indiana state sales tax.

Indiana does not have special sales tax rates for certain types of purchase, a common practice in many states for goods such as food and clothing.Like many other states, Indiana levies a special sales tax on prepared food from restaraunts or other locations. The Indiana restaraunt sales tax is 9%.

Generally, the Indiana sales tax is collected only from the end consumer, or the end user of the product. Customers buying products in bulk, as a business-to-business transaction, or buying with the intent to resell do not have to pay the Indiana sales tax if they provide the seller with a Indiana Sales Tax Exemption Certificate at the time of purchase. Most states will accept the Uniform Sales and Use Tax Certificate for this purpose, which is available from the Multistate Tax Commission here.

Internet Sales Tax, or tax on purchases made over the internet, is currently a gray area in many states' tax codes. While most states can collect sales tax on internet purchases made within the state (the vendor and consumer are both located in Indiana), taxation of interstate internet transactions is much more complicated.

Currently New York, Rhode Island, North Carolina, Colorado, and Illinois have some form of online sales tax that also handles interstate transactions. For details on how Indiana handles taxation of online sales, read more about online sales taxes in the United States.

Resources:

[1] Table of state sales taxes on Wikipedia
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#By_jurisdiction

[2] Indiana sales tax information on Tax-Rates.org
http://www.tax-rates.org/Indiana/sales-tax

[3] Table of state sales, use, and excise taxes by The Tax Foundation
http://www.taxfoundation.org/taxdata/show/245.html

[4] State level taxation resources on IRS.gov
http://www.irs.gov/businesses/small/article/0,,id=99021,00.html