Effective January 1, 2024, the Indiana Department of Revenue revised Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax, to reflect changes to county income tax rates and the state withholding tax rate.
County Income Tax Rate Increases
Effective January 1, the following counties have income tax rate increases: (1) Allen County – the rate increased to 0.0159 from 0.0148; (2) Blackford County – the rate increased to 0.025 from 0.015; (3) Crawford County – the rate increased to 0.0165 from 0.01; (4) Floyd County – the rate increased to 0.0139 from 0.0135; (5) Franklin County – the rate increased to 0.017 from 0.015; (6) Howard County – the rate increased to 0.0195 from 0.0175; (7) Jefferson County – the rate increased to 0.0103 from 0.009; (8) Ohio County – the rate increased to 0.02 from 0.015; (9) Pike County – the rate increased to 0.012 from 0.0075; (10) Posey County – the rate increased to 0.0145 from 0.0125; (11) Putnam County – the rate increased to 0.023 from 0.021; (12) Ripley County – the rate increased to 0.0238 from 0.0138; and (13) Steuben County – the rate increased to 0.0199 from 0.0179.
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.
State Withholding Tax Rate Reduction
Also effective January 1, the Indiana state withholding tax rate decreased to 3.05% from 3.15%. This means that the state supplemental wage tax rate decreased to 3.05% from 3.15%.
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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for PayrollOrg.
