Indiana Corporate Tax Rules for 2026: Complete Guide to Bonus Depreciation, BIRT, and Federal Conformity

For 2026, Indiana corporate tax rules are undergoing a major transformation. The state is aligning with federal changes from the One Big Beautiful Bill Act of 2025, bringing permanent bonus depreciation, immediate R&D expensing, and expanded tax obligations for 50,000+ Indiana businesses. This guide covers everything you need to know about 2026 Indiana corporate tax rules—from new opportunities to compliance deadlines.

Table of Contents

• Key Takeaways
• What Changed in 2026 for Indiana Corporate Tax Rules?
• How Does Permanent Bonus Depreciation Work for Your Business?
• What Is Immediate R&D Expensing and How Can You Use It?
• How Does the BIRT Expansion Affect Your Bottom Line?
• What Do the New Multinational Tax Rules Mean for Your Corporation?
• What Are the Key 2026 Compliance Deadlines for Indiana Businesses?
• Where Can You Access Free Tax Preparation Services?
• Next Steps
• Frequently Asked Questions

Key Takeaways

• 2026 Indiana corporate tax rules now feature permanent bonus depreciation, allowing immediate deduction of asset costs.
• Domestic R&D expenses can be immediately expensed in 2026, with retroactive benefits to 2022 for previously capitalized costs.
• Over 50,000 Indiana businesses are newly subject to the Business Income and Receipts Tax (BIRT) for 2025 tax year filings due April 15, 2026.
• Multinational corporations benefit from reduced anti-tax avoidance burdens, saving on GILTI and BEAT tax liability.
• Indiana offers free tax preparation services for small businesses to navigate 2026 compliance requirements.

What Changed in 2026 for Indiana Corporate Tax Rules?

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made sweeping changes to federal tax law. For 2026, Indiana corporate tax rules reflect this federal conformity, creating new opportunities and obligations for business owners.

The most significant shift is the permanence of provisions that were previously temporary. Bonus depreciation, for example, was always set to expire. The OBBBA extended this benefit indefinitely, allowing Indiana businesses to deduct asset purchases immediately rather than depreciating them over years.

Key Legislative Shifts Under OBBBA for Indiana

• Permanent bonus depreciation eliminates guessing about future tax benefits for capital investments.
• Immediate R&D expensing changes how technical companies handle research and development costs.
• Loss limitations now cap deductions at 90% of losses annually, affecting strategy timing.
• Federal conformity means Indiana businesses must comply with federal anti-tax avoidance rules (GILTI, BEAT, FDII).

Indiana’s alignment with federal law is not automatic for all businesses. Corporations, S-corps, partnerships, and sole proprietors may experience different impacts depending on their structure and income levels.

Federal Conformity: What It Means for Indiana Businesses

When Indiana adopts federal conformity, it means Indiana tax law changes to match federal law—but not always in the same way. Indiana businesses file state returns using federal taxable income as a starting point, then make adjustments for state-specific rules.

For 2026, this conformity means Indiana businesses can now take advantage of federal depreciation and R&D rules immediately. However, it also means compliance with federal reporting requirements and documentation standards.

How Does Permanent Bonus Depreciation Work for Your Business?

Bonus depreciation is a powerful tax tool that has been available in recent years but was set to expire. Many Indiana business owners were uncertain whether to rely on this deduction for long-term planning. The OBBBA changed that uncertainty by making bonus depreciation permanent.

What Assets Qualify for Bonus Depreciation?

Qualified property for bonus depreciation includes tangible business property, manufacturing equipment, vehicles, and certain other assets. Property must be placed in service after the effective date and have a recovery period of 20 years or less.

Specifically qualifying assets for 2026 include:

• Machinery and equipment for manufacturing and processing.
• Vehicles used in active business (not for personal use).
• Computer equipment and software for business operations.
• Building improvements (certain qualified leasehold improvements).
• Land improvements, sidewalks, and parking areas.

Real Example: How Bonus Depreciation Saves Indiana Manufacturers

Consider an Indianapolis manufacturing company that purchased $500,000 in production equipment in 2026. Under traditional depreciation, the company would deduct perhaps $50,000 annually over 10 years. With bonus depreciation, the company can deduct the full $500,000 in 2026, generating significant tax savings in that year.

If the company has $1 million in taxable income before the depreciation deduction, bonus depreciation could reduce Indiana state tax liability by approximately $35,000 (assuming Indiana’s corporate tax rate). This cash savings can be reinvested in business growth.

What Is Immediate R&D Expensing and How Can You Use It?

One of the most transformative changes in 2026 Indiana corporate tax rules is the treatment of research and development (R&D) costs. Previously, domestic R&D expenses had to be capitalized and amortized over five years. This created timing mismatches and reduced immediate tax benefits.

The OBBBA changed this for domestic R&D, allowing immediate expensing. This change is retroactive to 2022, meaning companies can now claim amended returns or obtain refunds for R&D costs incurred in 2022, 2023, and 2024.

What Qualifies as Domestic R&D Under 2026 Rules?

Domestic R&D includes expenses for developing new products, improving existing products, and creating new processes—all performed in the United States. For Indiana tech companies, software developers, and biotech firms, this creates substantial tax planning opportunities.

Qualifying R&D expenses in 2026 include:

• Employee wages for researchers and engineers developing new products.
• Supplies and materials consumed in R&D activities.
• Facility costs allocated to R&D (electricity, rent, maintenance).
• Software development costs for internal use or product development.
• Testing and prototype development expenses.

Retroactive R&D Benefits: Filing Amended Returns for 2022-2024

The immediate expensing rule is retroactive to 2022. This means an Indiana tech company that invested $200,000 in R&D in 2022 but amortized it over five years can now file an amended Form 1040-X (for individuals) or state return to claim the full deduction in 2022.

The statute of limitations for amending returns is generally three years. For 2022 tax year returns, the deadline to claim this retroactive benefit is April 15, 2025 (already passed), but 2023 and 2024 returns can still be amended for claimed refunds.

How Does the BIRT Expansion Affect Your Bottom Line?

For many Indiana business owners, the BIRT expansion is the most immediate concern for 2026. After years of exemptions and exclusions, the state is now collecting BIRT from businesses previously exempt, creating new compliance obligations and tax liability.

The Business Income and Receipts Tax (BIRT) is a state-level tax based on two components: net income and gross receipts. Businesses must calculate tax on both and pay whichever is higher (or the combined amount under specific rules).

BIRT Tax Rates for 2026 Tax Year

BIRT Component	2026 Tax Rate	Calculation Basis
Net Income Tax	~6% (5.8%-6.0%)	Taxable net income reported on business returns
Gross Receipts Tax	0.14%	Total gross revenue from all business operations

For a business with $100,000 in net income and $500,000 in gross receipts, the calculations are:

• Net Income BIRT: $100,000 × 6% = $6,000
• Gross Receipts BIRT: $500,000 × 0.14% = $700
• Total BIRT Due: Approximately $6,000 (the higher amount)

Use our Self-Employment Tax Calculator to estimate how federal self-employment tax interacts with your state BIRT obligations for 2026.

Which Indiana Businesses Are Now Subject to BIRT?

Over 50,000 Indiana businesses that were previously exempt from BIRT must now file and pay the tax for 2025 tax year returns due April 15, 2026. This includes sole proprietors, partnerships, S-corporations, and other business entities.

Businesses subject to BIRT include:

• Self-employed individuals and 1099 contractors with business net income.
• Small business corporations and S-corporations with gross receipts above threshold amounts.
• Professional service businesses, consulting firms, and practices.
• Online businesses, e-commerce operations, and digital service providers.
• Gig economy workers and platform-based business operators (Uber, DoorDash, etc.).

What Do the New Multinational Tax Rules Mean for Your Corporation?

Large Indiana-based multinational corporations are experiencing significant tax relief under 2026 rules. The OBBBA adjusted rates and provisions affecting Global Intangible Low-Taxed Income (GILTI), the Base Erosion and Anti-Abuse Tax (BEAT), and Foreign-Derived Intangible Income (FDII).

GILTI, BEAT, and FDII: Understanding Multinational Tax Provisions

These three provisions affect large corporations with international operations. GILTI taxes income earned abroad. BEAT taxes large corporations with substantial deductions paid to related parties. FDII incentivizes U.S. export of intangible property.

Under prior law, these rates were scheduled to increase significantly in 2026, creating large tax jumps. The OBBBA locked in lower rates, reducing tax liability for affected corporations. This is most beneficial for pharmaceutical companies, software firms, and manufacturing businesses with substantial foreign operations.

What Are the Key 2026 Compliance Deadlines for Indiana Businesses?

Filing Type	2026 Deadline	Extension Available?
Individual Income Tax Returns (Form 1040)	April 15, 2026	Yes, to October 15, 2026
S-Corporation and Partnership Returns	March 15, 2026	Yes, by September 15, 2026
Business Income and Receipts Tax (BIRT)	April 15, 2026 (for 2025 tax year)	Yes, request extension

Where Can You Access Free Tax Preparation Services?

Recognizing that 50,000+ new BIRT filers may be unprepared for compliance, Indiana provides free tax preparation resources:

• Contact the Indiana Department of Revenue at https://www.in.gov/dor/ for free preparation service information.
• Access IRS.gov for federal return preparation assistance and forms.
• Contact local Small Business Development Centers (SBDCs) for tax planning guidance.
• Review SBA.gov for business tax resources and planning tools.

 

Uncle Kam in Action: Tech Startup Saves $45,000 with 2026 R&D Expensing Rules

Client Snapshot: An Indianapolis-based software development company with $2.5 million in annual revenue and 15 employees developing SaaS products.

The Challenge: The company invested heavily in R&D from 2022-2025, spending $450,000 on developer salaries, testing, and infrastructure for product development. Under prior law, this was capitalized and amortized over five years, limiting immediate deductions. With tight cash flow, the company needed immediate tax relief to fund growth.

The Uncle Kam Solution: We identified that the 2026 immediate R&D expensing provision was retroactive to 2022. The company filed amended returns for 2022-2024, claiming the full R&D deduction in each year instead of the amortized amounts. Additionally, we documented all qualifying domestic R&D expenses for 2025 to claim full expensing on the 2025 return due April 15, 2026.

The Results: Through retroactive R&D expensing amendments and current-year planning, the company captured $45,000 in combined tax savings across 2022-2025. The refunds arrived in Q2 2026, providing capital for hiring two additional developers. Indiana and federal tax liability was reduced by approximately 30% on R&D-related income.

Internal Link: See more case studies of Indiana businesses maximizing 2026 tax benefits at Uncle Kam’s Client Results.

Next Steps

Don’t wait until April 15, 2026 to address your Indiana corporate tax obligations. Take these actions now:

• Inventory your assets: Identify machinery, equipment, and technology purchases for 2026 bonus depreciation planning.
• Document R&D expenses: Gather records of all domestic research, development, and testing costs incurred in 2022-2025 for amendment potential.
• Calculate BIRT exposure: Determine whether your business is newly subject to BIRT and estimate 2026 tax liability.
• Schedule a consultation: Work with an experienced Indiana tax professional through Uncle Kam’s Tax Strategy services to develop a 2026 plan that leverages new provisions.

Frequently Asked Questions

What is the difference between federal and Indiana corporate tax rules for 2026?

Federal rules apply to all U.S. businesses and determine taxable income. Indiana rules add a state-level tax on top of federal tax. For 2026, Indiana conformity means that most deductions and credits available federally are also available in Indiana, though Indiana may have additional requirements or different rates. The BIRT is Indiana-specific and doesn’t exist at the federal level.

Can I claim bonus depreciation on real estate or building purchases?

Bonus depreciation generally does not apply to land or buildings. However, certain qualified leasehold improvements may qualify. The safest approach is to consult a tax professional about specific property before claiming depreciation, as the IRS maintains detailed rules about what qualifies.

Do I have to claim bonus depreciation, or can I use traditional depreciation instead?

Bonus depreciation is elective. You can choose to claim it, or you can stick with traditional depreciation schedules. However, if claiming bonus depreciation would create a large loss that carries forward, traditional depreciation might be more advantageous. This requires careful tax planning.

Is the R&D expensing benefit available for all businesses or only tech companies?

R&D expensing is available to any Indiana business performing qualifying research and development. This includes manufacturers developing new products, biotech firms, construction companies innovating processes, and service providers creating new offerings. Documentation of the R&D activity is essential for claiming the deduction.

How do I know if my business is subject to BIRT?

BIRT applies if you have business net income or gross receipts from Indiana operations. The expansion eliminates prior exemptions, so if you operate a business in Indiana and report business income on your federal return, you likely owe BIRT. Contact the Indiana Department of Revenue or use their online calculator to confirm.

Can I get an extension to file if I’m not ready by April 15, 2026?

Yes, both federal and Indiana extensions are available. Filing Form 4868 (federal) extends your individual return to October 15, 2026. However, extensions only delay filing—taxes due on April 15 must still be paid on time, or penalties apply. Extensions are particularly useful for businesses awaiting K-1 forms or other documentation.

What happens if I don’t file BIRT in 2026?

Failure to file BIRT results in penalties and interest. Indiana charges a penalty for late filing and late payment, plus interest accrues daily on unpaid amounts. Additionally, the state can pursue enforcement action against the business. Given the free preparation resources available, compliance is manageable and strongly recommended.

Will Indiana corporate tax rules continue to change after 2026?

Tax laws change regularly. Bonus depreciation, permanent in the OBBBA, is unlikely to change in the near term. However, future federal legislation could alter GILTI, BEAT, or FDII rates. Indiana may also adjust state-specific provisions. Staying informed through annual reviews with a tax professional is essential for long-term planning.

Related Resources

• Entity Structuring Services – Optimize your business structure for 2026 tax efficiency.
• Tax Advisory Services – Work with experts on personalized 2026 tax planning.
• Business Owner Tax Strategies – Targeted guidance for business owners navigating new rules.
• IRS.gov – Official federal tax guidance and forms.
• Indiana Department of Revenue – State tax guidance, forms, and free resources.

Last updated: February, 2026

Compliance Checkpoint: This information is current as of 2/9/2026. Tax laws change frequently. Verify updates with the IRS at IRS.gov or the Indiana Department of Revenue at IN.gov/DOR if reading this later in 2026.