Overview
Indiana uses a flat state income tax rate and is notable for also having county-level income taxes. The county tax must be set up simultaneously with the state tax because the county calculation relies on exemption information from the state’s Form WH-4.
State Income Tax (SIT)
Indiana imposes a flat state income tax of 2.95% for 2026. The state is unique in that county income taxes are mandatory and must be configured alongside the state tax. The county tax calculation uses parameters from the Indiana State Form WH-4, including personal exemptions, dependent exemptions, and adoption exemptions.
| Tax Structure | Flat rate: 2.95% for 2026 |
| State Withholding Form | Form WH-4 |
| County Taxes | Mandatory; must be set up with state tax |
| Supplemental Rate | 2.95% |
| Special Requirements | County tax rates vary and are assigned by the state |
Supplemental Wages
Indiana supports the following supplemental calculation methods. When using the flat method, the supplemental rate is 2.95%.
Employer State Unemployment Tax (SUTA)
Your assigned SUTA rate will be based on your company’s experience with unemployment claims. New employers typically start at the default rate of 2.5%.
| Tax Type | Employer-paid only |
| Default New Employer Rate | 2.5% |
| Rate Assignment | Experience-rated; assigned annually by the state |
Other Taxes & Obligations
Local Taxes: Indiana has county taxes that may apply depending on the employee’s work and residence location. Be sure to verify which local jurisdictions apply to each employee.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, tax, or accounting advice. Netchex does not provide tax or legal guidance and makes no representations regarding the accuracy or applicability of this information. Laws and regulations may change. The information on this page reflects payroll tax guidelines as of March 2026. For the most current requirements, please refer to: Indiana Department of Revenue
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