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.
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:
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 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 only pay taxes in the state where they live, not the state where they work. 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)
The state of Indiana doesn’t require employers to collect tax for paid sick leave, nor does the state have a program providing paid sick 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 2023 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.
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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