The total gross state product in 2005 was US$214 billion in 2000 chained dollars. Indiana's per capita income, as of 2005, was US$31,150. A high percentage of Indiana's income is from manufacturing. The Calumet region of northwest Indiana is the largest steel producing area in the U.S. Steelmaking itself requires generating very large amounts of electric power. Indiana's other manufactures include pharmaceuticals and medical devices, automobiles, electrical equipment, transportation equipment, chemical products, rubber, petroleum and coal products, and factory machinery.

Despite its reliance on manufacturing, Indiana has been much less affected by declines in traditional Rust Belt manufactures than many of its neighbors. The explanation appears to be certain factors in the labor market. First, much of the heavy manufacturing, such as industrial machinery and steel, requires highly skilled labor, and firms are often willing to locate where hard-to-train skills already exist. Second, Indiana's labor force is located primarily in medium-sized and smaller cities rather than in very large and expensive metropolises. This makes it possible for firms to offer somewhat lower wages for these skills than would normally be paid. In other words, firms often see in Indiana a chance to obtain higher than average skills at lower than average wages.

Indiana is home to the international headquarters of pharmaceutical company Eli Lilly in Indianapolis as well as the headquarters of Mead Johnson Nutritionals, a division of Bristol-Myers Squibb, in Evansville. Elkhart, in the north, has also had a strong economic base of pharmaceuticals, though this has changed over the past decade with the closure of Whitehall Laboratories in the 1990s and the planned drawdown of the large Bayer complex, announced in late 2005. Overall, Indiana ranks fifth among all U.S. states in total sales and shipments of pharmaceutical products and second highest in the number of biopharmaceutical related jobs. Medical device manufacturers include Zimmer in Warsaw and Cook in Bloomington.

The state is located within the Corn Belt and the state's agricultural methods and principal farm outputs reflect this: a feedlot-style system raising corn to fatten hogs and cattle. Soybeans are also a major cash crop. Its proximity to large urban centers, such as Chicago, assure that dairying, egg production, and specialty horticulture occur. Specialty crops include melons, tomatoes, grapes, and mint. Most of the original land was not prairie and had to be cleared of deciduous trees. Many parcels of woodland remain and support a furniture-making sector in the southern portion of the state.

Indiana is becoming a leading state in the production of biofuels, such as ethanol and biodiesel. Indiana now has 12 ethanol and 4 biodiesel plants located in the state. Reynolds, located north of Lafayette is now known as BioTown, USA. The town is experimenting with using biofuels and organic fuels, such as those made with manure, to power the town.

In mining, Indiana is probably best known for its decorative limestone from the southern, hilly portion of the state, especially from Lawrence County (the home area of Apollo I astronaut Gus Grissom). One of the many public buildings faced with this stone is The Pentagon, and after the September 11, 2001 attacks, a special effort was made by the mining industry of Indiana to replace those damaged walls with as nearly identical type and cut of material as the original facing. There are also large coal mines in the southern portion of the state. Like most Great Lakes states, Indiana has small to medium operating petroleum fields; the principal location of these today is in the extreme southwest, though operational oil derricks can be seen on the outskirts of Terre Haute.

Indiana's economy is considered to be one of the most business-friendly in the U.S. This is due in part to its conservative business climate, low business taxes, relatively low union membership, and labor laws. The doctrine of at-will employment, whereby an employer can terminate an employee for any or no reason, is in force.

Indiana has a flat state income tax rate of 3.4%. Many Indiana counties also collect income tax. The state sales tax rate is 7%. Property taxes are imposed on both real and personal property in Indiana and are administered by the Department of Local Government Finance. Property is subject to taxation by a variety of taxing units (schools, counties, townships, cities and towns, libraries), making the total tax rate the sum of the tax rates imposed by all taxing units in which a property is located. However, a law enacted on March 19, 2008 limits property taxes to one percent of assessed value for homeowners, two percent for rental properties and farmland and three percent for businesses.

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