Financial leadership for Indiana clinics operating around the country's largest life sciences cluster outside the coasts

Flat individual income tax on a downward path

Indiana imposes a flat individual income tax (3.15% for tax year 2023, 3.05% for 2024, with HB 1002 setting a glide path to 2.9% by 2027 conditional on revenue triggers). For pass-through clinic owners, this is one of the more predictable individual rate environments in the Midwest. Local county income taxes layer on top, ranging roughly from under 1% to over 3% depending on county, and can be meaningful for owners residing in one Indiana county while operating clinics in another.

Source: Tax Foundation: Indiana

Corporate adjusted gross income tax at 4.9%

Indiana's corporate AGI tax rate is 4.9% (effective July 1, 2021), among the lower rates in the country for C corps. For most clinic structures S corp or PLLC remains preferable, but for groups using a C corp blocker in an MSO structure the rate matters.

Source: Indiana Department of Revenue: Corporate Tax

Strong Corporate Practice of Medicine doctrine

Indiana enforces a strict CPOM doctrine. The Indiana Medical Licensing Board and case law restrict non-physician ownership of medical practices. Physicians must operate through professional corporations or PLLCs. DSO and MSO structures are workable but require careful drafting to comply with Indiana law, particularly around fee splitting and management fees. Several MSO platforms have been challenged for fee structures that would have been acceptable in less-strict states.

Pass-Through Entity Tax election

Indiana adopted an optional Pass-Through Entity Tax in 2023, allowing partnerships and S corps to elect entity-level taxation at the individual flat rate. The election restores federal SALT cap deductibility for owners. Election timing and calculation rules differ from neighboring states, and the federal benefit depends on owners' marginal federal rates. The election should be modeled annually rather than assumed.

Source: Indiana Department of Revenue: PTET

Healthy Indiana Plan (HIP) and Medicaid

Indiana Medicaid is delivered through Hoosier Healthwise (children and pregnant women) and the Healthy Indiana Plan 2.0 (adults under the ACA expansion framework, with the state's unique HSA-style POWER account design). Managed care is provided through Anthem, CareSource, MDwise, and UnitedHealthcare. HIP cost-sharing and copay rules differ from traditional Medicaid and affect cash-collection economics for practices serving HIP members.

Source: Healthy Indiana Plan