You might think every state imposes a privilege or franchise tax on businesses simply for existing, but Indiana does things differently. The Department of Revenue is crystal clear: there’s no general state tax on ordinary businesses. Your LLC, S-corp, or C-corp won't pay extra simply for operating here.
Indiana's tax-style levy targets just one specific sector: financial institutions. This sector pays the Financial Institution Franchise Tax (FIT). Banks, credit unions, savings and loan associations, and similar entities file an annual FIT-20 return and pay a flat rate of 8.5 percent on their apportioned income.
Most businesses deal with Indiana's corporate income tax instead, which applies to net income rather than net worth or capital stock.
If your business isn't about money, you can probably relax, as only financial institutions need to worry about Indiana's FIT. Indiana's Financial Institution Tax targets entities that derive their income from lending, deposit-taking, or other banking services, while ordinary corporations and LLCs are subject to the state's corporate income tax.
The official rules live in the FIT booklet published by the Department of Revenue, but the core idea is simple: no financial activity, no obligation.
What counts as a "financial institution"? Indiana uses a fairly traditional definition. Entities subject to FIT include:
Meeting the definition alone doesn't trigger a filing requirement. You must also cross one of Indiana's economic thresholds: at least $5 million in assets attributable to Indiana or twenty or more Indiana customers. Cross either line, and the state expects a return..
You'll need the primary FIT-20 form plus a stack of federal paperwork and Indiana-specific schedules that must line up perfectly.
Start with the current year's FIT-20 return and instruction booklet form. The Indiana Department of Revenue packages everything together, so you won't search across multiple pages. Their Business Tax page keeps all active forms in one place.
FIT-20 requires four critical pieces of information that cause most filing errors:
The return mirrors your federal filing, so attach a copy of your latest Form 1120 or 1120-S. The FIT booklet includes built-in schedules for apportionment, NOL carryforwards, and tax credits. Fill out every schedule, even if the result is zero.
Indiana doesn't charge separate filing fees for FIT-20, which makes it one of the few business tax bright spots. Your only cost is the actual tax owed.
If your financial institution meets Indiana's filing thresholds, your FIT-20 return is due on the 15th day of the fourth month after the close of your taxable year. For most calendar-year filers, that's April 15. You need at least 90% of the liability paid by then to avoid penalties.
Meeting that annual deadline is only half the job. Indiana expects financial institutions filing FIT-20 to pre-pay the tax through quarterly estimated payments if the year's bill exceeds $2,500. The schedule for calendar-year filers is:
Fiscal year filers shift those due dates to the 20th day of the fourth, sixth, ninth, and twelfth months of your fiscal year.
You have three options for filing your Financial Institution Tax return with Indiana: use the state's INTIME portal online, mail a paper Form FIT-20, or hand it off to a tax professional.
Indiana strongly pushes electronic filing, and they're right to. The current FIT-20 return and instructions are found in the Financial Institution Tax booklet, which you can grab from the Department of Revenue.
The electronic filing process is straightforward:
Electronic filing gives you instant confirmation, built-in math checks that catch errors before they become problems, and same-day payment posting to avoid late penalties.
Missing Indiana's Financial Institution Tax deadline triggers penalties fast. The Indiana Department of Revenue will hit you with a penalty equal to 10% of unpaid tax or $5 (whichever is higher) starting the day after your due date.
Late payment brings its own pain. The same 10% penalty applies to any unpaid balance, plus daily interest that keeps running until you clear the debt. The real damage goes beyond money. The DOR can place your entity in a state of non-compliance, which can hinder your ability to secure licenses, financing, or expand into other states. Other states check your Indiana status before issuing certificates of authority, so one missed return here can create expensive registration problems elsewhere.
Indiana's levy targets financial institutions exclusively, meaning most businesses can largely ignore it. If you're not in banking or lending, you fall into one of three clear exemptions:
While the Financial Institution Tax applies specifically to banks and similar entities, most businesses face Indiana's standard tax obligations. Non-financial institutions are subject to corporate income tax, along with sales tax, employment taxes, and local income taxes where applicable.
Financial institutions remain subject to these same sales, employment, and local tax obligations in addition to their specialized Financial Institution Tax requirements.
Extensions are available electronically through INTIME or on paper before the filing deadline, matching the federal extension period. However, you must still make a "fifth-quarter" payment covering at least 90% of your current year's liability by the original due date, as extensions only delay paperwork, not payments.
For amendments, use the same FIT-20 form, check "Amended," and attach schedules that explain the changes. Indiana doesn't charge amendment fees, but additional tax owed incurs standard 10% penalties plus interest. Amended filings typically process within a few weeks through your INTIME account.
Indiana's Financial Institution Tax creates coordination challenges with quarterly payments and supporting schedules, where missed deadlines trigger penalties. Multi-state operations multiply this complexity across different filing calendars, annual reporting requirements, and nexus thresholds.
While Discern can't help with Indiana Financial Institution Tax compliance, our system covers annual business filings for all 51 jurisdictions, plus deadline tracking and notifications for Indiana tax obligations. Ready to streamline multi-state compliance? Discover how Discern handles business filings and deadline management.
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