Selling a business in Indiana: what the state takes (2026)
Indiana’s top individual income tax rate is 2.95%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 2.95%
- Top Indiana income tax rate (2026)
- $737,500
- State tax on a $25M long-term gain
- 26.8%
- Combined federal and state rate on $25M
- 38 of 51
- Rank by total tax on $25M (1 = highest)
How Indiana taxes a business sale
- Income tax
- Top rate 2.95%: Flat rate on all Indiana adjusted gross income.
- Long-term capital gains
- Capital gains are taxed as ordinary income at the flat 2.95% state rate plus the county income tax; no exclusion or preferential rate.
- Entity-level taxes
- S corporations generally pass income through; Indiana has an elective pass-through entity tax.
- Local taxes
- Every county levies a local income tax on residents' Indiana AGI, including capital gains, based on county of residence on January 1. 2026 rates run from 0.5% (Porter) to 3.0% (Randolph); Marion County (Indianapolis) is 2.02%.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Indiana tax | $295,000 | $737,500 | $1,475,000 |
| Total tax | $2,675,000 | $6,687,500 | $13,375,000 |
| Effective combined rate | 26.75% | 26.75% | 26.75% |
| Net proceeds after tax | $7,325,000 | $18,312,500 | $36,625,000 |
| Extra tax versus Texas | $295,000 | $737,500 | $1,475,000 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Indiana tax
- $737,500
- Taxable gain at 2.95%
- $737,500
- Total tax
- $6,687,500
- Effective rate on the gain
- 26.75%
- Net proceeds after tax
- $18,312,500
Not included: Indiana county income tax (Randolph County) residents pay up to 3% on top, about $750,000 on this gain.
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Indiana figures are for tax year 2026. State rate fell from 3.0% to 2.95% for 2026 (scheduled cut; 2.9% scheduled for 2027). County rates are from DOR Departmental Notice #1, revised effective October 1, 2026. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Indiana DOR Departmental Notice #1 (effective Oct. 1, 2026): state rate 2.95% and county rates
- 2Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
You may quote and republish figures from this page with attribution and a link to the source.
Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Indiana,” 2026, https://laurent.capital/research/seller-tax-map/indianaLink (HTML)
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