Indiana Manufacturing Sales Tax Exemption Worksheet
Indiana exempts equipment and materials used directly in the production of tangible personal property from state sales tax. Use this worksheet to classify each purchase, see how much tax is at stake at the 7% rate and track which suppliers hold your exemption certificate.
| Purchase | Vendor | Category | Treatment | Purchase cost | Tax if charged at 7% | Certificate sent | |
|---|---|---|---|---|---|---|---|
$28,700 | |||||||
$1,295 | |||||||
$2,940 | |||||||
$672 | |||||||
$3,220 | |||||||
$1,540 |
The tax column shows what 7% would add on each line, so filter to your Exempt rows to see the tax avoided. Indiana's state rate is 7%; confirm current law, the exact statutory test for each item and the current exemption certificate form with the Indiana Department of Revenue. Form numbers have changed over time.
Automate purchase classification
Optional: have us build a private assistant that suggests tax treatment from your PO and vendor history.
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How to use the worksheet
Replace the sample rows with your last year of capital and operating purchases from the fixed asset register and accounts payable. Choose a category and a treatment for each line. Set treatment to Review for anything you cannot support yet. Export to Excel so your tax adviser can comment, and keep it with the certificates it refers to.
The direct production test
Indiana's manufacturing exemptions turn on direct use in production. Equipment that directly acts on the product, from the start of the production process to the completion of the finished product, is the typical case. Items for administration, selling and general plant upkeep are outside it. The statutes sit in Indiana Code title 6, article 2.5, chapter 5, so cite the exact section when you document a position.
- Direct production equipment and tooling: strongest support
- Raw material and components in the product: purchased for resale or as materials
- Utilities used in production: separate rules and thresholds apply
- Office, vehicles and buildings: taxable
Certificates and ERP setup
A supplier will not drop the tax without an Indiana exemption certificate on file. The state has used different form numbers over time, so check the Department of Revenue site for the current one and keep a dated copy for each supplier. In your ERP, give exempt purchases their own tax code, map it to the right asset or expense account and flag the purchase order so accounts payable does not accrue use tax.
Common mistakes
Teams most often claim exempt status on shared infrastructure with no support, send a certificate with the wrong reason ticked, or forget to retain it. Another common error is missing use tax on equipment bought from out-of-state vendors that did not charge Indiana tax. The Review treatment in this worksheet exists to keep those items visible until you have a written position.
Frequently Asked Questions
What is the Indiana manufacturing sales tax exemption?
It exempts qualifying equipment, tooling and materials used directly in the production of tangible personal property for sale from Indiana state sales and use tax. It does not cover general office, administration or selling items.
Which exemption certificate do I use in Indiana?
Indiana uses a general sales tax exemption certificate, and the form number has changed over time (ST-105 and ST-200 are both associated with it). Check the Indiana Department of Revenue website for the current form and instructions before sending one.
What is Indiana's sales tax rate?
The Indiana state sales and use tax rate is 7%. Indiana has no local sales tax on top, so the worksheet uses 7% to show what is at stake on each purchase.
Do I need to keep proof for each exempt purchase?
Yes. Keep the certificate, the invoice and a note of how the item is used in production. That combination is what a Department of Revenue auditor asks for when they test a sample of exempt purchases.
If you would like exempt and taxable purchases coded automatically from PO and vendor data in your ERP, we can build a private assistant that runs on your own servers.
Related Tools
Wisconsin Manufacturing Sales Tax Exemption Checklist
Step-by-step checklist to confirm what qualifies for the Wisconsin manufacturing exemption, keep certificates audit-ready, and claim the manufacturing credit.
Compliance & ContractsMichigan Industrial Processing Exemption Checklist
Checklist to confirm what qualifies for Michigan's industrial processing exemption, keep Form 3372 files in order and set up ERP tax codes.
Compliance & ContractsOhio and North Carolina Manufacturing Exemption Certificate Register
Editable register to track manufacturing exemption certificates for Ohio and North Carolina customers and suppliers, with ERP tax code columns.
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