S-Corp Election in Indiana (Form 2553) (2026)

Q: How do I elect S-corp status in Indiana?

To elect S-corp status for an Indiana LLC or corporation, file IRS Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service. Indiana recognizes the federal election; the S corporation then files Form IT-20S with the Indiana Department of Revenue.

Q: Do S-corps pay Indiana state income tax?

Generally the S corporation itself does not pay Indiana adjusted gross income tax at the entity level. Income passes through to shareholders, who report their shares on their Indiana returns. The S corporation still files an informational return, Form IT-20S.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

To elect S-corporation (S-corp) status for an Indiana limited liability company (LLC) or corporation, you file IRS Form 2553, Election by a Small Business Corporation, with the Internal Revenue Service (IRS). Indiana recognizes the federal S election, and the S corporation then files Form IT-20S, the S Corporation Income Tax Return, with the Indiana Department of Revenue.

Quick Answer

Federal Form: IRS Form 2553, Election by a Small Business Corporation
Federal Agency: Internal Revenue Service (IRS)
State Form: Indiana Form IT-20S, S Corporation Income Tax Return
State Agency: Indiana Department of Revenue (DOR)
State Tax: Pass-through income to shareholders; optional pass-through entity tax
Deadline: 15th day of 3rd month of tax year, or any time in prior year

S-Corp Election Overview for Indiana Businesses

Electing S-corporation status is a federal tax election made with the IRS, not with the Indiana Secretary of State or the Indiana Department of Revenue (DOR). This election changes how a business entity - either an LLC or a traditional C-corporation - is taxed at the federal level, and Indiana conforms to that federal treatment for state income tax purposes. This means that if your business is recognized as an S corporation by the IRS, it is generally treated as an S corporation by Indiana, though it must still file a Form IT-20S to report that income to the state.

The primary benefit of an S-corp election for many small businesses is the potential for savings on self-employment taxes for LLC owners or payroll taxes for corporate officers, by taking a portion of the owner's compensation as distributions rather than salary, subject to reasonable compensation rules. However, S-corp status also comes with additional compliance requirements, such as stricter payroll obligations and rules on shareholder eligibility and stock structure. For a broader comparison, see S-corp vs. LLC and LLC vs S-corp tax.

How to Elect S-Corp Status in Indiana

The election itself is a federal filing. There is no separate state form to make the S election in Indiana - the state follows your federal status - but you will file an Indiana S corporation return once the election is in place. The steps are as follows:

Form a qualifying entity: First, you need an eligible business entity - an Indiana LLC or corporation properly registered with the Indiana Secretary of State (INBiz). For an LLC, make sure you have an Employer Identification Number (EIN) from the IRS, which is required for any entity electing S-corp status.
Meet S-corp eligibility requirements: The IRS requires the entity to be a domestic corporation, have no more than 100 shareholders, have only individuals, certain trusts, and estates as shareholders, have only one class of stock, and not be an ineligible corporation.
File IRS Form 2553: To make the election, file IRS Form 2553, Election by a Small Business Corporation, with the IRS. The form asks for entity details, shareholder information and consents, and the effective date of the election.
Receive IRS approval: After the IRS reviews and approves the election, it sends a CP261 notice confirming S-corporation status. Retain that letter with your permanent records.
File Indiana Form IT-20S: Once the S election is effective, the entity files Indiana Form IT-20S, the S Corporation Income Tax Return, with the DOR for each tax year, and issues Indiana Schedule IN K-1s to shareholders.

Because Indiana conforms to the federal election, you do not file a separate state election form; the IT-20S is a reporting return, not the election itself.

Form 2553 Filing Deadlines and Late Elections

The timing of your Form 2553 filing determines which tax year the election takes effect. Under IRS rules, for an S-corp election to be effective for the current tax year, Form 2553 must be filed:

By the 15th day of the third month of the tax year for which the election is to take effect, or
At any time during the tax year immediately preceding that tax year.

For example, for a calendar-year entity (tax year ending December 31), to make the S-corp election effective for January 1, 2026, you must file Form 2553 by March 15, 2026. For a newly formed business, the 2-month-and-15-day period begins on the date the entity first has shareholders, acquires assets, or begins doing business, whichever is earliest.

If you miss the deadline, the IRS may grant relief for a late S-corp election under certain circumstances. This typically requires demonstrating reasonable cause for the delay and that all shareholders reported income consistently with the intended election. The instructions to Form 2553 and IRS Publication 542, Corporations, explain the late-election relief procedure.

Indiana State Income Tax Treatment of S-Corps

Indiana conforms to the federal income tax treatment of S corporations, so for Indiana income tax purposes an S corporation is generally a pass-through entity. Under Indiana Code, an S corporation is generally not subject to the Indiana adjusted gross income tax at the entity level. Instead, the income, losses, deductions, and credits pass through to shareholders in proportion to ownership, and shareholders report their shares on their individual Indiana income tax returns.

Key aspects of Indiana's treatment include:

Form IT-20S filing: The S corporation files Form IT-20S, the S Corporation Income Tax Return, reporting the entity's income and each shareholder's distributive share. Confirm the current due date in the IT-20S instructions.
Shareholder reporting: Each shareholder receives an Indiana Schedule IN K-1 and reports the income on the Indiana individual income tax return (Form IT-40 or IT-40PNR). Indiana's individual adjusted gross income tax is a flat rate that also interacts with county income taxes.
Nonresident shareholders: Indiana requires the S corporation to withhold or otherwise report Indiana adjusted gross income tax on the Indiana-source income of nonresident shareholders; the IT-20S instructions address these obligations.
Optional pass-through entity tax: Indiana offers an elective pass-through entity tax (PTET) that lets a qualifying S corporation pay Indiana tax at the entity level, which can give owners a federal deduction that works around the individual state-and-local-tax (SALT) cap. Whether it helps depends on each owner's situation.

While S corporations generally avoid entity-level adjusted gross income tax, they remain subject to Indiana sales and use tax if they make taxable sales, and to employer taxes such as unemployment insurance if they have employees. For statutory detail, see Indiana Code Title 6, Article 3, on the adjusted gross income tax.

Indiana LLCs Electing S-Corp Status

An Indiana LLC can elect to be taxed as an S corporation. By default, a single-member LLC is a disregarded entity (a sole proprietorship for tax purposes) and a multi-member LLC is a partnership. Electing S-corp status changes this federal tax classification by filing Form 2553 with the IRS. LLC owners often choose it to potentially reduce self-employment taxes once profits comfortably exceed a reasonable salary.

When an Indiana LLC elects S-corp status, it keeps its legal structure as an LLC under Indiana law, so it retains the liability protection and operational flexibility of an LLC. The election changes only its tax treatment. The LLC must still meet all Indiana LLC requirements, such as maintaining a registered agent and filing its business entity report with the Secretary of State, and it will now file Form IT-20S in place of a partnership return.

The decision to elect S-corp status for an LLC should weigh the potential tax savings against the added administrative burden, including payroll processing for owner-employees and stricter compliance with IRS reasonable-compensation rules. Model the numbers for your situation using our SE tax calculator and see Form 2553 explained before deciding.

Maintaining S-Corp Status in Indiana

Once an Indiana business has elected S-corp status, it must continue to meet federal and state requirements to keep that status. Failure to comply can cause involuntary termination of the S election, reverting the entity to C-corporation (or default LLC) taxation and creating unexpected tax bills.

Key maintenance requirements include:

Federal compliance:
- File IRS Form 1120-S, U.S. Income Tax Return for an S Corporation, annually (by March 15 for calendar-year filers).
- Issue Schedule K-1 (Form 1120-S) to all shareholders.
- Maintain eligibility (no more than 100 shareholders; one class of stock).
- Pay owner-employees a "reasonable salary" for services, subject to payroll taxes, before taking distributions.
Indiana compliance:
- File Form IT-20S each year and issue Indiana Schedule IN K-1s to shareholders.
- Register for and remit Indiana sales and use tax if the entity makes taxable sales.
- Keep the entity in good standing with the Secretary of State by filing the required business entity report.

Stay informed about federal and Indiana tax changes that can affect S corporations. For the federal-to- state workflow and estimated payments, see how to file business taxes and the national business tax hub.

Frequently Asked Questions

How do I elect S-corp status in Indiana?

File IRS Form 2553, Election by a Small Business Corporation, with the IRS. Indiana recognizes the federal election; the S corporation then files Form IT-20S with the Department of Revenue. There is no separate state election form.

Does Indiana recognize federal S-corp elections?

Yes. Indiana conforms to the federal S-corporation election, so an entity treated as an S corporation for federal income tax is treated the same for Indiana income tax and reports on Form IT-20S.

What is the deadline to file Form 2553 for an Indiana S-corp?

For the election to be effective for the current tax year, file Form 2553 by the 15th day of the third month of the tax year, or at any time during the preceding tax year. The IRS may grant late-election relief for reasonable cause.

Do S-corps pay Indiana state income tax?

Generally the S corporation does not pay Indiana adjusted gross income tax at the entity level. Income passes through to shareholders, who report their shares on their Indiana returns. The S corporation still files the informational Form IT-20S.

What Indiana tax form does an S-corp file?

An Indiana S corporation files Form IT-20S, the S Corporation Income Tax Return, with the Department of Revenue, and issues each shareholder an Indiana Schedule IN K-1. Indiana also offers an elective pass-through entity tax that some S corporations choose.

Sources

IRS - About Form 2553, Election by a Small Business Corporation.
IRS - S Corporations (overview of federal rules).
IRS - Publication 542, Corporations (S-corp eligibility and late-election relief).
IRS - About Form 1120-S, U.S. Income Tax Return for an S Corporation.
IRS - Get an Employer Identification Number (EIN).
Indiana Department of Revenue - Business Tax (Form IT-20S; S corporation filing).
Indiana Department of Revenue - Tax Forms (IT-20S and Schedule IN K-1).
Indiana Department of Revenue - Individual Income Taxes (shareholder reporting; IT-40).
Indiana Department of Revenue - Pass-Through Entity Tax (optional entity-level election).
Indiana Code - IC 6-3-2-2.8, Exemptions from adjusted gross income tax (S corporations).
Indiana Code - IC 6-3-4-13, Withholding for nonresident shareholders.
Indiana Code - Title 6, Article 3, Adjusted Gross Income Tax.
Cornell Law School Legal Information Institute - 26 U.S. Code § 1361 - S corporation defined.
Cornell Law School Legal Information Institute - 26 CFR § 1.1362-1 - Election to be an S corporation.

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the IRS and Indiana Department of Revenue before acting.