The penalty for late filing of state taxes in Indiana is determined by the Indiana Department of Revenue and varies depending on the amount of tax owed and the duration of the delay. Generally, the penalty is 5% of the unpaid tax for each month the return is late, up to a maximum of 25%. The penalty is imposed to incentivize timely filing and payment of state taxes. It helps ensure taxpayers fulfill their obligations and contribute to the funding of state services and programs. Additionally, the penalty serves as a deterrent, discouraging taxpayers from intentionally delaying their filings or withholding tax payments.