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Indiana Wage and Payroll Tax Facts

February 02, 2024

Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Indiana.

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Table of Contents

  1. Indiana Minimum Wage Rates
  2. Indiana State Income Tax (SIT) Rates
  3. Indiana State Unemployment Insurance (SUI) Rates
  4. Indiana State Disability Insurance (SDI) Rates
  5. Miscellaneous Indiana Tax Information
  6. Indiana Employer Registration
  7. Additional Indiana Payroll Tax Resources

The Hoosier State uses the same minimum wage rates as those required by the federal government, and has a few reciprocal agreements with other states to provide tax relief for citizens who work and live in different states. 
 
When it comes to processing payroll, Indiana-based organizations must handle the following taxes in addition to those required by the federal government:

The below information was last updated January 30, 2024. It is not intended as legal or tax advice.

Indiana Minimum Wage Rates

Wage Type

Indiana Rates

Federal Rates

Minimum Wage

 $7.25

$7.25

Tipped Minimum Wage

 $2.13

$2.13

Actual Tip Credit

 $5.12

$5.12

Indiana State Income Tax (SIT) Rates

Indiana has a flat income tax rate of 3.15%, meaning all residents pay the same amount regardless of their income levels. 

Additional Indiana SIT Details

Valid Filing Statuses
  • S = Single
  • M = Married

Exemptions
  • Interstate carrier employees
  • Compensation for services for forestry, lumbering, or landscaping
  • Casual laborers (e.g., yard workers or domestic employees)
  • Ministers, precinct election officers
  • The NFL and its affiliates for Super Bowl services
  • Nonresident employees from reciprocating states (KY, MI, OH, PA & WI)
  • Nonresident military spouses
  • Nonresident salaried entertainers

Form W-4

 Form WH-4

Reconciliation Frequency

Annual

Indiana State Unemployment Insurance (SUI) Rates

SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.

Indiana SUI Tax Details

Taxable Wage Base

$9,500

Employee Subject to Tax

No

Rates for Experienced Employers

0.5% - 7.4%

Rates for New Employers

2.5%

Effective Period

Calendar Year

Voluntary Contributions Allowed

Yes; due within 30 days after receipt of tax rate notice.

Indiana State Disability Insurance (SDI) Rates

SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Indiana, however, doesn't require employers to collect an SDI tax.

Miscellaneous Indiana Tax Information

Reciprocal Agreement(s)

Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. Indiana currently has reciprocal agreements with the following states:

  • Kentucky
  • Michigan
  • Ohio
  • Pennsylvania
  • Wisconsin

While residents of these areas who work in Indiana must still have income taxes withheld from the wages they earned inside the state, they are also allowed a credit on their non-resident tax returns towards the state’s income taxes due to also paying income taxes to their home states. Indiana residents, however, have Indiana SIT withholdings regardless of whether their wages were earned inside or outside the state. 

Paid Sick Leave (PSL) Taxes

The state of Indiana doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.

Paid Family and Medical Leave (PFML) Taxes

The state of Indiana doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.

Local Taxes

In addition to the state-wide taxes mentioned above, over 90 counties in the state have local tax rates as well, which vary by location. Employees pay the corresponding local tax rate based on their listed county of residence on their submitted Form WH-4. Refer to the state’s recent Department of Revenue Notice for more on each county’s code and 2024 tax rate.

Indiana Employer Registration

The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Revenue for withholding tax topics and the Department of Workforce Development for unemployment tax topics.

Registration Details

Department of Revenue

Department of Workforce Development

Phone

 (317) 232-2240 (800) 437-9136

Online Registration

 INTIME Homepage DWD Account Registration

Registration Instructions

 Online registration is required, and taxpayer ID and location ID will be issued during that registration. Online registration is required, and an account number will be issued during that registration.

Employer Self-Service Login

 INTIME Homepage ESS Homepage

Additional Indiana Payroll Tax Resources

 

This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.

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