Business Income Taxes in Indiana: Who Pays?

Three questions are commonly asked regarding state business income taxes:

1. How much business income is taxed through the individual income tax system?
2. What portion of corporations have no state corporate income tax liability?
3. What is the distribution of corporate income tax liability among corporations?

This analysis has sought to address each of these questions and a few closely related issues using data from 2001. Approximately 15 percent of the income taxed through the individual income tax system is business income. Just over 44 percent of corporate income tax returns have no corporate income tax liability, while 2.5 percent of corporations pay approximately 80 percent of the corporate income tax collections. Finally, multistate corporations pay the bulk (approximately 83 percent) of corporate income tax collections.