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use tax

Use tax is a tax imposed by state taxing authorities on the purchase of goods outside the taxpayer’s state of residence when sales tax is not collected on the transaction. Use taxes are generally designed to discourage the purchase of goods that are not subject to sales tax.

In Indiana, use tax functions as a counterpart to the state's sales tax and applies to the use, storage, or consumption of tangible personal property in Indiana when Indiana sales tax has not been paid. This typically occurs when Indiana residents purchase goods from out-of-state sellers, such as through online or catalog shopping, and the seller does not collect Indiana sales tax. The use tax rate in Indiana is the same as the sales tax rate, which is 7%. Residents are required to report and pay use tax on their individual income tax returns or through other reporting methods if they have made purchases subject to use tax. Businesses must also report and pay use tax on taxable items purchased for use in Indiana when sales tax was not paid at the time of purchase. The aim of the use tax is to protect Indiana merchants by preventing out-of-state vendors without a physical presence in Indiana from having a competitive advantage by not charging sales tax.

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Taxes

use tax

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use tax

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