Two Indiana Counties Will Increase Income Tax Rates on October 1

Effective October 1, 2021, the Indiana Department of Revenue has issued a new Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax. Two counties—Owen and Warrick—are increasing their county income tax rates.

• Owen—increases to 0.025 from 0.016
• Warrick—increases to 0.01 from 0.005

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.

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