Effective January 1, 2023, the Indiana Department of Revenue has issued a revised Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax. Three counties will have tax rate changes:
- Greene—increases to 0.0215 from 0.0195 (2.15% from 1.95%)
- Montgomery—increases to 0.0265 from 0.023 (2.65% from 2.3%)
- Perry—decreases to 0.014 from 0.0181 (1.4% from 1.81%)
Also effective January 1, 2023, the state withholding rate will decrease to 3.15% from 3.23%. This means that the state supplemental wage tax rate will also decrease to 3.15%.
County Rate Changes
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.
Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.
Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA.
