Five Indiana Counties Have Income Tax Rate Changes Effective October 1

Effective October 1, 2023, the Indiana Department of Revenue (DOR) revised Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax. The following five counties have income tax rate changes:

• Adams: decrease from 0.01624 to 0.016
• Clinton: increase from 0.0245 to 0.0265
• Dearborn: increase from 0.012 to 0.014
• Henry: increase from 0.017 to 0.018
• Vanderburgh: increase from 0.012 to 0.0125

All 92 of Indiana’s counties impose a county income tax on residents of the county and on nonresidents—who do not reside in another Indiana county—with a principal place of business or employment in the county. Each county has one county income tax rate (i.e., tax rates are the same for residents and nonresidents). Employers withhold state and county income taxes from employees’ wages.

The DOR revised Departmental Notice No. 1 to reflect a new tax exemption for first-time qualifying children, effective September 15, 2023.

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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.