2026 Tax Time | Indiana State Corporate Taxes

Business taxes in Indiana have not increased over the past 5 years—on paper, they’ve actually decreased or stayed very stable.

But the effective tax burden on dental practices has still gone up due to a combination of local taxes, wage inflation, and structural changes in how practices are taxed.

Let’s break it down clearly.

1) What’s actually happened to Indiana business tax rates (last ~5 years)

Corporate income tax

2020: ~5.25%
2021–present: 4.9%

👉 That’s roughly a 0.35% decrease (~7% relative reduction) over 5 years.

Pass-through business taxation (most dental practices)

Most dental practices (LLCs, S-corps) don’t pay corporate tax. They flow through to:

State income tax: ~3.23% (2020) → ~3.05% (2024) → trending to 3.0%
Local (county) income tax: ~1–3% depending on county

👉 Slight decline at the state level, but:

Local taxes have crept up in many counties
Combined effective rate often still ~4–6%+

Sales tax (relevant to dental ops)

Flat 7% (unchanged)

Big picture

Indiana is actually:

A top-10 tax-friendly state
One of the lowest corporate tax states (~4.9%)

👉 So purely from statutory rates, taxes have not increased.

2) So why does it feel like taxes are higher?

Because for dental practices, “tax burden” ≠ just tax rates.

Three big drivers:

A) More income is being taxed (strong collections growth)

Indiana state revenues are up ~7–12% year-over-year recently

👉 Meaning:

Dental practices are earning more nominal dollars (inflation + fee increases)
That income is being taxed—even at lower rates

Result: higher total tax bills despite lower rates

B) Local + payroll + hidden taxes are rising

For dental practices specifically:

County income taxes trending upward in some areas
Employer payroll taxes (FICA, unemployment)
Property taxes on real estate
Equipment depreciation changes (less favorable timing vs bonus years)

👉 These aren’t headline “tax cuts,” but they hit EBITDA directly

C) Shift toward W-2 wage pressure (huge for dentistry)

Labor is the biggest expense in dentistry.

Hygienist wages ↑ 20–40% in many markets post-COVID
Those wages are:
- Fully taxable
- Subject to payroll taxes

👉 This indirectly raises the tax burden per procedure

3) How this is affecting the dental profession

This is where it gets interesting—and very relevant to LADD.

1) Margin compression (even with stable taxes)

Even though tax rates dropped:

Labor ↑
Supplies ↑
Insurance reimbursement flat

👉 Taxes are now applied to tighter margins

Example reality:

2019: 18–22% EBITDA → taxed
2026: 12–18% EBITDA → still taxed

👉 Feels like “taxes are higher” because profit is harder to generate

2) More aggressive tax planning & entity structuring

Dentists are increasingly:

Using S-corps for distributions vs salary
Leveraging cost segregation / depreciation
Exploring multi-entity structures (real estate + practice split)

👉 Tax strategy matters more than ever

3) Accelerating DSO and group growth (like LADD Dental)

Lower corporate tax rates (4.9%) actually:

Favor scale and consolidation
Benefit multi-location groups

Why?

Ability to optimize tax structure across entities
Spread overhead (including tax/legal/accounting)
Capture efficiencies unavailable to solo practices

👉 This is a tailwind for groups like LADD Dental Group

4) Bottom-line takeaway

Taxes themselves haven’t gone up in Indiana.
In fact, they’ve slightly gone down.

But for dental practices:

👉 Effective tax pressure has increased because:

Income is higher (inflation)
Costs are much higher (especially labor)
More revenue is flowing through taxable channels

5) What this means strategically for LADD Dental Group

The winning organizations in this environment are doing:

Scale + density plays (multi-location efficiency)
Ancillary services (aligners, implants, specialty)
Tax-optimized entity structures
Real estate ownership strategies (NNN + depreciation)

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