Property Management Taxes In Indiana

Updated August 7, 2026

21 min read

This guide covers the taxes that actually apply to a property management company operating in Indiana, and to the rental income it handles on behalf of owners. Every figure below is tied to the statute, agency rule, or published guidance that sets it, so you can confirm a rate or deadline before acting on it.

State Income Tax On Rental And Management Income

Indiana taxes individual adjusted gross income at a flat rate that is stepping down each year through 2027, and every Indiana county layers a local income tax on top. Rental income flows through to the owner's Indiana return. Corporations pay a separate flat corporate adjusted gross income tax, and partnerships and S corporations may elect an entity-level pass-through entity tax. Nonresident owners are handled through entity-level withholding rather than a separate owner filing in most cases.

The Indiana individual adjusted gross income tax rate is stepping down by year: 3.05% for 2024, 3.00% for 2025, 2.95% for 2026, and 2.90% for 2027 and later years. (Indiana Department of Revenue, Rates, Fees and Penalties)
Departmental Notice #1 (R46 / 01-26), effective January 1, 2026, states that for 2026 the state adjusted gross income tax rate for individuals is 2.95%. (Indiana Departmental Notice #1, effective Jan. 1, 2026 (R46 / 01-26))
The Indiana corporate adjusted gross income tax rate is 4.9% for taxable years beginning after December 31, 2022. (Ind. Code 6-3-2-1; 2025 IT-20 Corporate Income Tax Booklet)
Indiana counties impose a local income tax in addition to the state rate. Both the county of residence and the county of principal business or employment are determined on January 1 of the calendar year in which the taxable year begins. If a person resides out of state on January 1 but has a principal place of work in an Indiana county, that county's rate applies. (Indiana Departmental Notice #1, effective Jan. 1, 2026)
County income tax rates may be adjusted in January and October, and the current rate chart for withholding is published in Departmental Notice #1. (Indiana Department of Revenue, Rates, Fees and Penalties)
Partnerships and S corporations may elect the pass-through entity tax (PTET) by checking the PTET return box on page 1 of Form IT-65 or Form IT-20S, or by filing Form IN-PTET. The election cannot be made after the original return is filed, and it cannot be added by amending the return. (Indiana Department of Revenue, Pass Through Entity Tax FAQ)
Nonresidents and part-year residents file Form IT-40PNR, Part-Year and Full-Year Nonresident Individual Income Tax Return, not the resident Form IT-40. A full-year nonresident who received income from Indiana sources must file IT-40PNR, with a narrow exception where the only Indiana income was pensions, non-business interest or dividends, or unemployment compensation. (2025 Indiana IT-40PNR Part-Year and Full-Year Nonresident Individual Income Tax Booklet)

Sales Tax On Rent: What Applies And What Does Not

Long-term residential rent is not subject to Indiana sales tax. The tax reaches accommodations furnished for less than 30 consecutive days, and county innkeeper's taxes ride on top of the same base. Since July 1, 2019 a house, condominium, or apartment rented for fewer than 30 days is covered in every county, so a manager running short-term inventory has both a state sales tax duty and a county innkeeper's tax duty unless a marketplace facilitator is handling collection or the narrow casual renters exemption applies.

Indiana imposes a 7% state sales tax on goods and tangible personal property. Businesses that sell taxable goods must register and receive a Registered Retail Merchant Certificate. (Indiana Department of Revenue, Sales Tax)
Indiana sales tax applies to accommodations furnished for less than 30 consecutive days. Rentals of 30 days or more and residential leases are not taxable, so ordinary long-term residential rent carries no Indiana sales tax. (Ind. Code 6-2.5-4-4; Sales Tax Information Bulletin #41, Sales Tax Application to Furnishing of Accommodations)
A county innkeeper's tax is a county tax on the rental of rooms, lodgings, or accommodations for periods of less than 30 days, and it is applied in addition to state sales tax. It does not apply to gross income from a transaction in which a person rents a room, lodging, or accommodation for a period of 30 days or more. (General Tax Information Bulletin #204, County Innkeeper's Taxes, November 2025)
Beginning July 1, 2019, the rental or furnishing of rooms, lodgings, or other accommodations in a house, condominium, or apartment furnished for consideration for less than 30 days became subject to innkeeper's tax, and all counties tax these accommodations even where the county's specific authorizing chapter does not mention them. (General Tax Information Bulletin #204, November 2025)
Innkeeper's tax is administered in the same manner as sales tax, so transactions that are not subject to sales tax are also not subject to innkeeper's tax, and sales tax exemptions for nonprofits and governmental entities carry over. A government exemption applies only if the lodging is billed directly to the governmental agency; billing the individual defeats the exemption even if the agency later reimburses. (General Tax Information Bulletin #204, November 2025)
The casual renters exemption exempts a rental from sales tax and county innkeeper's tax only if all four conditions are met: at least one owner maintains the house, condominium, or apartment as the owner's primary personal residence; the owner rents accommodations in the residence for fewer than 15 days in the current or preceding calendar year; none of the payments are made through a marketplace facilitator; and the rental qualifies under the special rule in Section 280A(g) of the Internal Revenue Code. (General Tax Information Bulletin #204, November 2025)
When an accommodation is rented through a marketplace facilitator such as an online travel company or a peer-to-peer property rental application, the marketplace facilitator, not the owner, must collect and remit the innkeeper's tax. When a personal residence is not rented through a marketplace facilitator and the casual renters exemption does not apply, the homeowner is responsible for collecting the tax. (General Tax Information Bulletin #204, November 2025)
Innkeeper's taxes are remitted to the Indiana Department of Revenue monthly through INTIME unless the adopting county ordinance requires remittance to the county treasurer, in which case they are paid monthly on forms approved by the county treasurer. Marketplace facilitators always remit to the Department regardless of county ordinance. (General Tax Information Bulletin #204, November 2025)
Twenty counties impose innkeeper's tax under chapters specific to them rather than the uniform chapter: Allen, Boone, Brown, Clark, Elkhart, Floyd, Hamilton, Hendricks, Jackson, Jefferson, Knox, Lake, LaPorte, Madison, Marion, Monroe, St. Joseph, Tippecanoe, Vanderburgh, Vigo, Wayne, and White. Provisions in those counties may differ from the uniform statute, so check the authorizing chapter for the county. (General Tax Information Bulletin #204, November 2025)

Property Tax

Indiana assesses property at market value-in-use and then applies circuit breaker credits that cap the bill as a percentage of gross assessed value. Tenant-occupied residential rental property generally falls under the 2% cap, not the 1% homestead cap, because the homestead standard deduction requires the property to be the owner's principal place of residence. Senate Enrolled Act 1 of 2025 added a new phased-in deduction specifically for 2% circuit breaker properties, which includes residential rentals, while simultaneously phasing the homestead standard deduction down to zero.

Indiana caps property tax at 1% of gross assessed value for homestead property, 2% for other residential property and agricultural land, and 3% for other real and personal property. Tenant-occupied residential rental property falls in the 2% category, and any improvements or acreage beyond the one homestead parcel are treated as residential and capped at 2%. (DLGF Fact Sheet, Circuit Breaker Caps)
If taxes for a property exceed the cap percentage, a property tax credit is issued for the dollar amount above the cap, so the amount actually payable equals gross assessed value multiplied by the circuit breaker percentage. (DLGF Fact Sheet, Circuit Breaker Caps)
Indiana property taxes are paid in arrears to the county treasurer in two installments, ordinarily due May 10 and November 10. The date moves when it falls on a weekend or holiday: DLGF lists the 2026 installments as May 11, 2026 and November 10, 2026. Confirm the current year's dates with the county treasurer rather than assuming a fixed calendar. (DLGF, Property Tax Due Dates)
Taxpayers who miss a property tax due date incur a penalty of 5% of the unpaid tax if payment is made within 30 days and no back taxes are owed, rising to 10% if not paid within 30 days. (DLGF, Property Tax Due Dates)
Section 52 of Senate Enrolled Act 1 of 2025 enacted Ind. Code 6-1.1-12-47, a new deduction for 2% circuit breaker credit properties. Eligible property includes residential property under Ind. Code 6-1.1-20.6-7.5(a)(2), long term care property, and agricultural land. Taxpayers do not have to apply; county auditors identify eligible properties and apply the deduction. (DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026; SEA 1-2025 Section 52; Ind. Code 6-1.1-12-47)
The 2% circuit breaker property deduction phases in as a percentage of assessed value: 6% for 2025 pay 2026, 12% for 2026 pay 2027, 19% for 2027 pay 2028, 25% for 2028 pay 2029, 30% for 2029 pay 2030, and 33.4% for 2030 pay 2031 and each taxable year thereafter. (DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026)
The homestead standard deduction requires the property to be an individual's principal place of residence, so it is not available on tenant-occupied rental property. HEA 1210-2026 added a statutory definition of principal place of residence to Ind. Code 6-1.1-12-37, defined as an individual's true, fixed, permanent home to which the individual has the intention of returning after an absence. (DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026; HEA 1210-2026 Section 54)
The homestead standard deduction amount is phasing down under Ind. Code 6-1.1-12-37(c): $48,000 for the 2025 assessment date, $40,000 for 2026, $30,000 for 2027, $20,000 for 2028, $10,000 for 2029, and $0 for the 2030 assessment date and each assessment date thereafter. (DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026; SEA 1-2025)
When an owner-occupied home is converted to a rental, the owner must notify the county auditor within 60 days of becoming ineligible for the homestead standard deduction. Under HEA 1210-2026, a person who fails to notify and claims the deduction shall be liable for the additional taxes that would have been due plus a civil penalty equal to 10% of those additional taxes. A county auditor who finds within three years after the tax due date that property was not eligible shall issue a notice of taxes, interest, and penalties including a 10% fine calculated on the total tax bill as if the deduction had not applied. (DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026; HEA 1210-2026 Sections 54 and 90; Ind. Code 6-1.1-12-37(g) and 6-1.1-36-17)

Withholding And Employer Taxes

Indiana employers withhold both state and county income tax, remit on Form WH-1, and reconcile annually on Form WH-3. County withholding follows the employee's county of residence as of January 1. Unemployment premiums go to the Department of Workforce Development on a low wage base. Separately, a partnership or S corporation with nonresident owners remits nonresident withholding at the entity level.

Form WH-1 is the Indiana withholding tax return required of any business withholding tax from employees. Form WH-3 is the annual withholding reconciliation. Both must be filed for each period even if no tax is due or there were no employees. (Indiana Department of Revenue, Withholding Income Tax)
All employers must file Form WH-3 by January 31 each year. If that date falls on a weekend, the filing deadline moves to the following business day. (Indiana Department of Revenue, Withholding Income Tax)
Withholding agents should withhold county tax based on the employee's Indiana county of residence as of January 1 of the tax year. If the employee resides out of state on January 1 but has a principal place of work or business in an Indiana county, withhold for that Indiana county. (Indiana Departmental Notice #1, effective Jan. 1, 2026)
For withholding occurring on or after January 1, 2024, an employer is not required to withhold Indiana state or county income tax on some employees who will work in Indiana for 30 days or less during the taxable year. (Indiana Departmental Notice #1, effective Jan. 1, 2026, Special Rules for Nonresident Employees)
Late filed WH-1 returns are subject to a penalty of up to 20% with a minimum penalty of $5. Late filed WH-3 returns are subject to a penalty of $10 per withholding document, counting each W-2, 1099, and K-1. (Indiana Department of Revenue, Withholding Income Tax)
Indiana unemployment insurance premiums are based on the first $9,500 of gross wages per employee per calendar year. Most new employers are assessed a rate of 2.5% for the first four calendar years they operate in Indiana. (Indiana Department of Workforce Development, Rate Computation and New Employer Premium Rate)
Indiana unemployment quarterly reports on Form UC-1 are due the last day of the month immediately following the end of the quarter. (Indiana Department of Workforce Development, Reporting and Paying FAQ)
Beginning in tax year 2015, any Form IT-20S or IT-65 return with nonresident shareholders or partners remits the nonresident withholding tax due into the corporate income tax account using Form IT-6WTH, which is due on the 15th day of the 4th month after the close of the taxable year. An extension of time to file does not extend the time to pay. (Indiana Department of Revenue, Nonresident Withholding FAQ)

Federal Obligations

Federal treatment does not vary by state. Rental income and expenses go on Schedule E, residential rental buildings depreciate over 27.5 years on the mid-month convention, and a management company that pays vendors or owners in the course of its trade or business has 1099 duties. The reporting threshold changed for payments made after December 31, 2025.

Rental income and expenses are reported on Schedule E (Form 1040). Rental income means any payment received for the use or occupation of property and must generally be included in gross income. (IRS Publication 527, Residential Rental Property)
Residential rental property is depreciated over a 27.5-year recovery period and nonresidential real property over 39 years, both using the mid-month convention. Depreciation begins when the property is ready and available for its intended use. (IRS Publication 527, Residential Rental Property)
Advance rent must be included in income in the year received regardless of the period it covers. A security deposit is not income if you plan to return it, but any amount kept because of a lease violation is income in the year you keep it. (IRS Publication 527, Residential Rental Property)
For payments made during 2025, the reporting threshold is $600 for nonemployee compensation on Form 1099-NEC and for rents on Form 1099-MISC. For payments made after December 31, 2025, the minimum reporting threshold increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027. (Instructions for Forms 1099-MISC and 1099-NEC, What's New)
Rents are reported in Box 1 of Form 1099-MISC, covering real estate rentals as well as machine and pasture rentals. (Instructions for Forms 1099-MISC and 1099-NEC)
Form 1099-NEC must be filed with the IRS and furnished to recipients by January 31. Form 1099-MISC must be furnished to recipients by January 31 and filed with the IRS by February 28 on paper or March 31 if filed electronically. (Instructions for Forms 1099-MISC and 1099-NEC)
Report on Form 1099-MISC or Form 1099-NEC only when payments are made in the course of your trade or business. (Instructions for Forms 1099-MISC and 1099-NEC)
Landlords must keep records documenting acquisition cost and basis, improvements capitalized separately, the split between deductible repairs and capitalized improvements, and depreciation claimed. (IRS Publication 527, Residential Rental Property)

Filing Deadlines

Indiana individual returns follow the federal April 15 date, entity-level nonresident withholding and PTET payments key off the 15th day of the fourth month after year end, the annual withholding reconciliation is due January 31, and unemployment reports are quarterly.

The Indiana individual income tax return, Form IT-40 or Form IT-40PNR for nonresidents and part-year residents, is due April 15. For tax year 2025 the due date is April 15, 2026. Filing late with tax due triggers interest and possible penalties. (2025 Indiana IT-40PNR Part-Year and Full-Year Nonresident Individual Income Tax Booklet)
Form WH-3, the annual withholding reconciliation, is due January 31, moving to the following business day if January 31 falls on a weekend. (Indiana Department of Revenue, Withholding Income Tax)
Form IT-6WTH, used to remit nonresident withholding for Form IT-20S and Form IT-65 filers and for PTET estimated payments, is due on the 15th day of the 4th month after the close of the taxable year. (Indiana Department of Revenue, Nonresident Withholding FAQ)
No late payment penalty is due on composite withholding tax if at least 80% of the combined composite withholding tax and PTET for the current year, or 100% of the prior year's withholding tax and PTET, is remitted by the 15th day of the 4th month following the end of the tax year. (Indiana Department of Revenue, Pass Through Entity Tax FAQ)
Form UC-1, the quarterly unemployment contribution report, is due the last day of the month immediately following the end of the quarter. (Indiana Department of Workforce Development, Reporting and Paying FAQ)
County innkeeper's taxes remitted to the Department are paid monthly through INTIME. Innkeeper's taxes collected at the county level must be paid monthly on forms approved by the county treasurer. (General Tax Information Bulletin #204, November 2025)
Property tax installments are due to the county treasurer on approximately May 10 and November 10 each year, with the exact date shifting to the next business day when it falls on a weekend. (DLGF, Property Tax Due Dates)

Registration And Recordkeeping

Indiana business tax registration runs through INBiz, and filing and payment run through INTIME. A short-term rental operator collecting innkeeper's tax registers the same way. Managing real estate for another person for consideration requires a real estate license. Recordkeeping duties come from the tax administration statute and reach all source documents.

Businesses register with multiple state agencies through the State of Indiana's INBiz website. A business selling taxable goods receives a Registered Retail Merchant Certificate, with one certificate required per retail location. (Indiana Department of Revenue, Sales Tax; General Tax Information Bulletin #204)
A Registered Retail Merchant Certificate renews automatically if the business has no outstanding liabilities and no missing returns. It is revoked for unpaid tax without an established payment plan or for unfiled returns, and renews seven days after all liabilities are resolved or a payment plan is established and all returns are filed. (Indiana Department of Revenue, Sales Tax)
Innkeepers register their business through INBiz and then remit innkeeper's taxes monthly through INTIME, the Department's online e-services portal at intime.dor.in.gov. Marketplace facilitators must also register to collect innkeeper's taxes using INBiz. (General Tax Information Bulletin #204, November 2025)
Every person subject to a listed Indiana tax must keep books and records so the Department can determine the amount of the person's liability by reviewing those books and records, including all source documents necessary to determine the tax such as invoices, register tapes, receipts, and canceled checks. Books, records, and filed returns must be retained for an unlimited period if the person fails to file a return or receives notice that the Department suspects a fraudulent, unsigned, or substantially blank return. (Ind. Code 6-8.1-5-4)
No person may, for consideration, sell, buy, trade, exchange, option, lease, rent, manage, list, or appraise real estate, or negotiate or offer to perform any of those acts, in Indiana or with respect to real estate situated in Indiana, without a license. Leasing, renting, and managing are explicitly named, so third-party property management is licensed activity. (Ind. Code 25-34.1-3-2; definition of broker at Ind. Code 25-34.1-1-2)
Real estate licensing in Indiana is administered by the Indiana Real Estate Commission through the Professional Licensing Agency, with administrative rules at Title 876 of the Indiana Administrative Code. (Indiana Professional Licensing Agency, Real Estate Licensing Information; 876 IAC)

Recent Changes Worth Tracking

Effective Tax years 2025, 2026, and 2027: The Indiana individual adjusted gross income tax rate stepped from 3.05% (2024) to 3.00% (2025), then to 2.95% (2026), and is scheduled to reach 2.90% for 2027 and later years. (Indiana Department of Revenue, Rates, Fees and Penalties; Departmental Notice #1 (R46 / 01-26))
Effective Beginning with 2025 assessments payable in 2026: Senate Enrolled Act 1 of 2025 created a new property tax deduction for 2% circuit breaker credit properties at Ind. Code 6-1.1-12-47. Residential property, which includes tenant-occupied rentals, is eligible. The deduction phases in at 6% of assessed value for 2025 pay 2026, 12% for 2026 pay 2027, 19% for 2027 pay 2028, 25% for 2028 pay 2029, 30% for 2029 pay 2030, and 33.4% for 2030 pay 2031 and thereafter. No application is required. (SEA 1-2025 Section 52; DLGF memorandum, Legislation Affecting Deductions, Credits, and Exemptions, May 27, 2026)
Effective Phased by assessment year beginning with the 2025 assessment date: Senate Enrolled Act 1 of 2025 phases the homestead standard deduction down from $48,000 for the 2025 assessment date to $40,000 for 2026, $30,000 for 2027, $20,000 for 2028, $10,000 for 2029, and $0 for 2030 and thereafter, while the supplemental homestead deduction percentage rises from 40% for taxes due in 2026 to 46% for 2027, 52% for 2028, 57% for 2029, 62% for 2030, and 66.7% for 2031 and thereafter. (SEA 1-2025; Ind. Code 6-1.1-12-37(c) and 6-1.1-12-37.5; DLGF memorandum, May 27, 2026)
Effective July 1, 2026: House Enrolled Act 1210-2026, signed March 12, 2026, added a statutory definition of principal place of residence to the homestead statute and made the additional tax liability plus a 10% civil penalty mandatory rather than discretionary when an owner fails to notify the county auditor within 60 days of becoming ineligible for the homestead standard deduction. County auditors must also include a 10% fine in ineligibility notices. (HEA 1210-2026 Sections 54 and 90; DLGF memorandum, May 27, 2026)
Effective November 2025, upon publication: General Tax Information Bulletin #204 on county innkeeper's taxes was reissued in November 2025, replacing the March 2023 version. It notes that as of July 1, 2025 Parke and Switzerland counties have the option to adopt ordinances imposing innkeeper's tax separate from the uniform chapter, but had not done so as of publication, and that Clark County's former 30-room minimum threshold is no longer applicable. (General Tax Information Bulletin #204, County Innkeeper's Taxes, November 2025)

Tax is one half of Indiana compliance. See our guide to Indiana property management laws and regulations for licensing, trust account, and disclosure rules.

Keeping This Straight

Tax rates and thresholds move more often than most operators expect, and the figures circulating in older articles go stale quickly. Check any rate against its citation before you quote it to an owner, and re-check them at the start of each tax year.

This guide is a starting point for professional managers, not tax or legal advice. For a specific filing, work with a CPA familiar with Indiana rental property, and confirm current figures with the Indiana Department of Revenue or the IRS. Every number on a return traces back to a ledger entry, so residential property accounting done through the year is what makes filing season uneventful.