Indiana Sales Tax Exemption: The Complete Guide for Businesses (Form ST-105, Resale, Manufacturing & Agriculture)
If your business buys inventory, machinery, or agricultural inputs in Indiana, you may be paying the state’s 7% sales tax on purchases that legally qualify for an Indiana sales tax exemption. Over a year, that adds up fast — and in most cases, the exemption is available the moment you hand your vendor the right certificate.
This guide breaks down exactly how the Indiana sales tax exemption works for businesses in 2026: who qualifies, which form to use, how to complete Form ST-105 correctly, and — just as important — how to recover tax you’ve already overpaid. We’ll also flag the single most common mistake we see (using the wrong form) so your exemption survives a Department of Revenue audit.
What Is an Indiana Sales Tax Exemption?
Indiana imposes a flat 7% sales and use tax on most retail sales of tangible personal property. Unlike many states, Indiana has no county or city add-on rates — 7% is the rate everywhere. That uniformity is convenient, but it also means there’s no “cheap county” to buy in. Your only real lever is claiming the exemptions you’re entitled to.
An Indiana sales tax exemption lets a qualified buyer purchase goods without paying the 7% tax at the point of sale. There are two ways items become exempt:
Product-based exemptions apply automatically to certain goods regardless of who buys them — for example, most unprepared groceries and prescription drugs. No certificate is required.
Buyer- or use-based exemptions depend on who you are or how you’ll use the item — for example, buying inventory for resale, or machinery used directly in manufacturing. These require a completed exemption certificate.
Here’s the part that trips up new business owners: for buyer- and use-based exemptions, you do not apply to the State of Indiana for approval. Instead, you give a completed certificate directly to your vendor. The vendor keeps it on file, stops charging you tax, and relies on that certificate if the Department of Revenue (DOR) ever audits the sale. If the certificate is missing or incomplete, the seller becomes liable for the uncollected tax — which is exactly why vendors are strict about getting it right.
Who Qualifies for a Sales Tax Exemption in Indiana?
For businesses, Indiana recognizes several use- and buyer-based exemption categories. The most common:
Resellers / retailers — Businesses buying inventory to resell, rent, or lease in the ordinary course of business (IC 6-2.5-5-8). Requires a Registered Retail Merchant Certificate (RRMC).
Manufacturers — Machinery, tools, and equipment directly used in the direct production of goods for sale (IC 6-2.5-5-3). This is Indiana’s “double-direct” test — more on that below.
Agricultural producers — Farmers and agricultural operations buying qualifying equipment, inputs, and supplies used in production.
Research & development — Qualifying R&D equipment used in R&D activities.
Government units — Federal, state, and local government entities (and Indiana public schools, which are treated as governmental).
Out-of-state businesses — Buyers registered in another state can often claim an Indiana exemption using their home-state registration details.
Important exception — nonprofits: Indiana nonprofits cannot use the general business certificate (Form ST-105). They follow an entirely separate process using Form NP-1. If you run a 501(c)(3), skip to the Indiana Nonprofit section below.
Indiana Sales Tax Exemption Certificate: Form ST-105
For the overwhelming majority of Indiana businesses, the workhorse document is Form ST-105, the General Sales Tax Exemption Certificate (State Form 49065). It covers resale, manufacturing, agricultural, government, and R&D exemptions on a single form.
What Form ST-105 Covers
Purchases for resale
Manufacturing machinery and equipment (direct production)
Agricultural production purchases
Government and public-school purchases
Qualifying R&D equipment
What Form ST-105 Does Not Cover
Form ST-105 cannot be used for:
Utilities (a separate utility exemption process applies)
Vehicles, watercraft, and aircraft
Gasoline
Nonprofit purchases (nonprofits must use Form NP-1)
Trying to force ST-105 onto one of these categories is a fast track to a denied exemption.
The Five Sections of Form ST-105
All five sections must be fully completed, or the exemption is invalid and the seller must charge tax:
Purchaser identification — Legal business name and address.
Identification number — Your Indiana Taxpayer Identification Number (TID) plus the 3-digit Location (LOC) Number. Out-of-state buyers without an Indiana TID use their home-state business license or state ID number.
Type of purchase — Check whether this is a single purchase or a blanket certificate (blanket covers ongoing purchases from that vendor), and describe what’s being bought.
Reason for exemption — Check the specific exemption reason (resale, manufacturing, agriculture, etc.).
Signature — Signed and dated by an authorized representative, with printed name and title.
What Is the RRMC and TID?
If you’re claiming a resale exemption, you must be a registered Indiana retail merchant. When you register with DOR, you receive a Registered Retail Merchant Certificate (RRMC), which displays your 10-digit TID and 3-digit LOC in the top-right corner. That TID is the number you’ll enter on Form ST-105. You can register through the state’s INTIME portal.
Other Indiana Sales Tax Exemption Forms You Should Know
Different situations require different forms. Using the wrong one is the #1 reason exemptions get rejected. Here’s a quick map:
SituationCorrect formWhere it goesResale, manufacturing, ag, government, R&DForm ST-105Give to the vendorNonprofit purchasesForm NP-1 (generated in INTIME, per vendor)Give to the vendorUtilities used in productionForm ST-200 application → ST-109 authorizationFile with DOR, then give ST-109 to utilityRecovering tax you already paid in errorForm GA-110L (refund claim)File directly with DOR
How to Get an Indiana Sales Tax Exemption (Step-by-Step for Businesses)
Here’s the exact sequence to claim your exemption correctly and keep it audit-proof.
Step 1 — Confirm Your Exemption Category
Pin down why you qualify: resale, manufacturing, agriculture, R&D, or government. The category dictates the form and the documentation you’ll need. Don’t guess — a manufacturer buying office furniture, for example, does not get the manufacturing exemption on that purchase.
Step 2 — Register with DOR and Get Your RRMC / TID
If you’re claiming resale, register with the Indiana Department of Revenue through INTIME to obtain your Registered Retail Merchant Certificate and TID. You’ll need this number for the certificate. (Manufacturers and farmers who aren’t reselling still complete ST-105 but follow the ID-number instructions for their situation.)
Step 3 — Gather Your Documentation
Depending on your exemption, have ready:
Your FEIN
Your Indiana TID / LOC (from the RRMC)
A clear description of the items and their exempt use
For out-of-state buyers: your home-state registration or ID number
Step 4 — Complete the Correct Certificate
For most businesses, that’s Form ST-105. Choose blanket if you’ll buy from this vendor repeatedly under the same exemption, or single purchase for a one-off. Fill in every section — incomplete forms are automatically invalid.
Step 5 — Give the Certificate to the Vendor (Not the State)
Hand the completed certificate to your seller. They keep it on file and stop charging you the 7% tax on qualifying purchases. You do not mail ST-105 to the state — Indiana neither approves nor denies these certificates in advance; the seller accepts them in good faith.
Step 6 — Keep Records for Audits
Retain copies of every certificate you issue, plus invoices that match the exemption claim. Indiana requires records be kept for at least three years, and DOR audits sellers regularly. Clean documentation is what turns an audit from a liability into a non-event.
Which Indiana Exemption Form Do You Need? (Quick Decision Guide)
Use this to route yourself to the right form in seconds:
Are you a nonprofit (501(c)(3))? → Form NP-1 (via INTIME, one per vendor). Not ST-105.
Buying utilities for production? → Form ST-200 → ST-109.
Buying a vehicle, watercraft, aircraft, or gasoline? → ST-105 does not apply; use the transaction-specific process.
Everything else — resale, manufacturing, agriculture, government, R&D? → Form ST-105.
Already paid tax you shouldn’t have? → Form GA-110L refund claim.
Indiana Nonprofits Cannot Use Form ST-105
This is the biggest structural difference between Indiana and neighboring states, and it catches nonprofits constantly: federal 501(c)(3) status does not automatically create an Indiana sales tax exemption, and nonprofits are prohibited from using Form ST-105.
Instead, Indiana nonprofits must:
Register with DOR by filing Form NP-20A (the Nonprofit Application for Sales Tax Exemption) through the INTIME portal, typically attaching the IRS determination letter.
Generate a Form NP-1 for each vendor inside INTIME. A separate NP-1 is required per vendor, and the vendor must be entered in INTIME before the certificate can be generated. NP-1 can be used as a blanket or single-purchase certificate for that vendor.
Stay registered by filing Form NP-20R (the Nonprofit Organization’s Report) every five years by May 15. Miss it, and DOR can revoke your exemption.
One more nonprofit trap: if your organization’s taxable sales reach $100,000 in a year, you must register and collect sales tax on those sales until you fall below $100,000 for two consecutive years. Exemption on purchases and obligations on sales are two separate questions.
Manufacturing & Agricultural Exemptions: Where Indiana Businesses Leave Money on the Table
The manufacturing and agricultural exemptions are the most valuable — and the most misapplied.
The Manufacturing “Double-Direct” Test
Indiana exempts equipment and materials directly used in the direct production of tangible personal property for sale (IC 6-2.5-5-3). Both prongs must be met:
Directly used — the item is an integral part of production, and
Direct production — it’s part of the actual production process (extraction, processing, assembly, refining, etc.).
Production-line machinery typically passes. Office supplies, general maintenance items, shipping materials, delivery trucks, and administrative equipment typically fail — they’re used around production, not in it. Misclassifying these is a common audit finding.
Agricultural Exemptions
Farmers and agricultural producers claim their exemption on Form ST-105, using their SSN or FEIN where an Indiana TID isn’t held, and completing the agricultural exemption section. As with manufacturing, the test is use in agricultural production — not general business use.
The Refund Opportunity Most Businesses Miss
Here’s the part with real dollars attached: if you’ve been paying Indiana sales or use tax on purchases that actually qualified for exemption, you can generally file Form GA-110L to recover it — going back up to three years (36 months) from when the tax was paid. For a manufacturer that never set up its accounts as tax-exempt, that lookback can represent a meaningful five- or six-figure recovery. This is exactly the kind of overpayment an exemption review is designed to surface.
Common Indiana Sales Tax Exemption Mistakes to Avoid
Using the wrong form. ST-105 for a nonprofit, or ST-105 for utilities/vehicles — instant rejection. Match the form to the situation.
Leaving sections blank. All five sections of ST-105 must be complete or the certificate is invalid and the seller must charge tax.
Claiming exemption on non-qualifying purchases. Office furniture is not manufacturing equipment. Overreaching invites penalties.
Missing your RRMC / TID. Resale claims require a valid Indiana Taxpayer Identification Number.
Assuming 501(c)(3) = automatic state exemption. It doesn’t. Nonprofits must register (NP-20A) and use NP-1.
Poor recordkeeping. No certificate on file, no invoice match — no defense in an audit.
Never reviewing past purchases. If you’ve overpaid, you’re leaving a refund on the table.
Indiana Sales Tax Exemption FAQ
Do I have to apply to the State of Indiana for a sales tax exemption?
For most business exemptions, no. You complete the correct certificate (usually Form ST-105) and give it to your vendor. Indiana does not approve or deny these certificates in advance. Nonprofits are the exception — they must register with DOR first and use Form NP-1.
What is the Indiana sales tax rate?
7%, statewide. Indiana has no local or county sales tax add-ons, so the rate is the same everywhere in the state.
Does a federal 501(c)(3) automatically qualify for Indiana sales tax exemption?
No. Federal tax-exempt status does not create an Indiana sales tax exemption. Nonprofits must register with DOR using Form NP-20A through INTIME and then use Form NP-1 (one per vendor) to make exempt purchases.
What is a Registered Retail Merchant Certificate (RRMC)?
It’s the certificate DOR issues when you register as an Indiana retail merchant. It displays your 10-digit TID and 3-digit LOC, which you enter on Form ST-105 when claiming a resale exemption.
Can an out-of-state business use Form ST-105 in Indiana?
Yes. Out-of-state buyers who don’t have an Indiana TID can generally use Form ST-105 with their home-state business license or state-issued ID number. DOR may request verification of your registration in that state.
What’s the difference between a blanket and single-purchase exemption?
A single-purchase certificate covers one transaction. A blanket certificate covers ongoing, repeated purchases from the same vendor under the same exemption, so you don’t re-issue a form every time.
Can I recover Indiana sales tax I already paid by mistake?
Often, yes. If you paid tax on purchases that qualified for exemption, you can generally file Form GA-110L with DOR to claim a refund, going back up to three years from the date the tax was paid.
How long do I need to keep exemption records?
At least three years. Keep every certificate you issue plus the matching invoices, since DOR audits sellers and can request documentation.
Conclusion: Claim Every Indiana Exemption You’re Entitled To
An Indiana sales tax exemption is straightforward once you know three things: which category you fall into, which certificate to use, and how to complete it so it survives an audit. For most businesses that means Form ST-105 — but the details matter, and the difference between a valid and invalid certificate is often a single blank field or the wrong form entirely.
The bigger opportunity is usually behind you: purchases where you’ve been paying 7% you never owed. A focused review of resale, manufacturing, and agricultural purchases frequently uncovers exemptions that were missed — and refunds that are still recoverable within Indiana’s three-year window.
Not sure which purchases qualify — or whether you’ve been overpaying? We offer a free Indiana sales tax exemption consult. We’ll review your exemption categories, make sure your ST-105 certificates are airtight, and flag any overpaid tax you may be able to recover.