Indiana Has No Franchise Tax — Key LLC Advantage
Indiana does not impose a franchise tax, privilege tax, or any entity-level fee on LLCs beyond the $32 biennial Business Entity Report. This makes Indiana one of the cheapest states to maintain an LLC long-term. For the full tax picture, see our Indiana LLC tax guide. For formation, see how to form an Indiana LLC.
What Indiana Doesn't Charge
- No franchise tax
- No gross receipts tax
- No commercial activity tax
- No minimum entity-level tax or fee
- No privilege tax for existing as a business
The ONLY mandatory state-level recurring cost is the $32 Business Entity Report filed every two years.
How This Compares
| State | Annual Entity-Level Cost | 5-Year Total |
|---|---|---|
| Indiana | $16/year effective ($32 every 2 years) | $64 |
| Colorado | $25/year | $125 |
| California | $800/year franchise tax + $20 SOI | $4,100 |
| Tennessee | $300/year min franchise & excise | $1,500 |
| Delaware | $300/year | $1,500 |
| Illinois | $75/year | $375 |
| Ohio | $0 report + CAT (variable) | Variable |
Why This Matters
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Get StartedFor dormant/startup LLCs: In California, a dormant LLC that earns nothing still owes $800/year. In Indiana, it owes $32 every two years ($16/year effective). Difference over 5 years: $4,036.
For multiple-entity structures: Real estate investors with 5 LLCs pay $160 total over 5 years in Indiana vs. $4,000 in California or $1,500 in Tennessee.
FAQ
Does Indiana have any hidden entity-level fees?
No. The $32 biennial report is the only state-mandated recurring cost. Sales tax, income tax, and withholding only apply when triggered by specific activities (selling goods, earning income, hiring employees).
Could this change?
Possible through legislation, but Indiana has historically maintained a business-friendly fee structure. The state relies on income tax and sales tax revenue rather than entity-level fees.