Indiana Sales Tax Exemptions / Tax Free Items Indiana: Sales Tax Handbook

Indiana:

What purchases are exempt from the Indiana sales tax?

While the Indiana sales tax of 7.00% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in Indiana.

Sales Tax Exemptions in Indiana

In Indiana, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.

Any unprepared foods that you can purchase at a grocery store are not considered to be taxable in Indiana. In addition to these food items, items which are sold to both farmers and to contractors are not eligible for sales tax in Indiana.

Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for Indiana:


Clothing

  7.%

Groceries

  EXEMPT

Prepared Food

  9%

Prescription Drugs

  EXEMPT

OTC Drugs

  7.%

These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.

Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":


Is candy taxable in Indiana? Candy is NOT considered a grocery in Indiana
Is soda taxable in Indiana? Soda is NOT considered a grocery in Indiana

Are services, shipping, installation, etc taxable in Indiana?

The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the Indiana sales tax see the Indiana sales taxability FAQ page.


Other tax-exempt items in Indiana

This table lists a number of additional categories of goods and services that are exempt from Indiana's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in Indiana.

Category Exemption Status
Food and Meals
Grocery Food EXEMPT
Manufacturing and Machinery
Machinery EXEMPT
Raw Materials EXEMPT
Utilities & Fuel EXEMPT
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Newspapers and Magazines
Newspapers EXEMPT
Occasional Sales
General Occasional Sales EXEMPT *
Optional Maintenance Contracts
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts EXEMPT
Services
Janitorial Services EXEMPT
Transportation Services EXEMPT
Software and Digital Products
Custom Software - Delivered on Tangible Media EXEMPT
Custom Software - Downloaded EXEMPT
Trade-Ins
General Trade-Ins EXEMPT

* See notes in category taxability page for details



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Source: http://www.salestaxhandbook.com/indiana/sales-tax-exemptions