Does Indiana Have an S Corporation Tax?

Corporate Taxation in Indiana

Corporations in Indiana must file and pay income taxes to the Department of Revenue (DOR). The 2023 corporate tax rate is 4.9%.

  • Tax returns for C corporations (Form IT-20) and S corporations (Form IT-20S) are due by May 15 for calendar year filers.
  • Corporations can file electronically or by mail.
  • Corporations with over $1 million in gross income must use Modernized e-File (MeF) software.

S Corporation Taxation in Indiana

How is an S Corp taxed in Indiana? S Corps are considered pass-through entities, with profits and losses passed through to shareholders and taxed at their individual tax rates. Indiana does impose a corporate income tax on S Corps, set at a rate of 5.25%.

LLC vs. S Corporation in Indiana

What is the difference between an LLC and an S Corp in Indiana?

  • LLCs provide liability protection for owners.
  • An S corporation itself does not provide liability protection; it comes from the underlying LLC or corporation structure.

In Indiana:

  • An LLC can have unlimited members, while S Corps have a 100 shareholder maximum.
  • Non-U.S. citizens/residents cannot become S corp shareholders but may join as LLC members.
  • LLCs allow flexible management and ownership structures, while S corps require formal records and meetings for the board and shareholders.

Conclusion

  • Both S corps and LLCs provide liability protection and flexibility in structure.
  • The main difference lies in taxation requirements:
    • LLCs pass all earnings directly to members.
    • S corps allow dividends distributions not subject to employment tax.

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