Indiana Contractor Tax Registration

An out-of-state contractor who picks up a project in Indianapolis without registering with the Indiana Department of Revenue will lose 5% of every payment before they even invoice for materials. That withholding tax is automatic, and it hits non-registered contractors hard on tight-margin jobs.

Get Your Federal EIN First

Before you touch anything at the state level, secure an Employer Identification Number from the IRS. The application is free, takes about five minutes online, and gives you the federal tax ID that every subsequent registration requires.

You need an EIN to open a commercial bank account, register with the Indiana Department of Revenue, and hire employees. Even if you plan to operate as a solo contractor, most bonding companies and insurance carriers require an EIN on their applications.

File Form BT-1 Through INBiz

Form BT-1 (Business Tax Application) is your single registration point with the Indiana Department of Revenue. You file it through the INBiz portal at inbiz.in.gov, and it covers every state tax obligation your contracting business might have:

• State withholding tax — mandatory if you hire employees; filing frequency depends on your withholding amount
• Sales tax — required if you sell taxable building materials at retail
• Registered Retail Merchant Certificate (RRMC) — a one-time $25 fee per physical business location

The BT-1 links your state tax accounts to your business entity. Once processed, you'll manage your filings and payments through the INTIME portal, Indiana's online tax management system.

The Registered Retail Merchant Certificate

The RRMC matters for contractors who purchase building materials. With an active RRMC, you can buy materials tax-exempt when those materials will be incorporated into real property — lumber, drywall, roofing materials, plumbing fixtures, and similar items that become part of a permanent structure.

The certificate costs $25 at initial registration and renews automatically every two years at no charge. You'll display your RRMC number when making tax-exempt purchases from suppliers.

Without an RRMC, you may have to pay sales tax on purchases that would otherwise qualify for tax-exempt treatment, so confirm the treatment of your materials with the DOR or a tax professional.

The 5% Withholding Tax for Out-of-State Contractors

Under Indiana's contractor withholding provisions, project owners and general contractors are required to withhold 5% of payments to out-of-state contractors who are not registered with the Indiana Department of Revenue. This withholding applies to all contract payments, including both labor and materials.

The withholding is not a penalty — it's a prepayment of Indiana income tax. But it ties up cash flow on every payment cycle until you file an Indiana return and claim the credit. On a $200,000 project, that's $10,000 withheld before you see it.

Registering with the DOR before your first Indiana project eliminates the withholding requirement entirely. Your project owner or GC can then pay you the full contract amount, and you handle your own Indiana tax filings through INTIME.

Managing Ongoing Tax Obligations

Once registered, Indiana contractors with employees must file withholding tax returns (monthly, quarterly, or annually depending on your withholding amount) and submit W-2s to the Department of Revenue.

Pass-through entities like LLCs and S-Corps pay Indiana income tax at the individual level. The state's flat income tax rate of 2.95% (2026) applies to Indiana-source income; it is scheduled to decrease to 2.90% in 2027.

The INTIME portal is where you'll manage all of this — filing returns, making payments, checking account balances, and downloading tax clearance letters when local building departments or general contractors request proof of good standing.

For the complete tax registration sequence and how it fits into the broader licensing process, the Indiana General Contractor License Guide covers every step from EIN through local permit approval.

See more Indiana guides →