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IN · payroll profile

Indiana

Everything an out-of-state employer needs before running a Indiana payroll: what to withhold, which form the employee signs, whether reciprocity applies, and who to register with.

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Personal income tax
Flat 2.95%
Reciprocal agreements
5 states
SUI wage base 2026
$9,500
Local income taxes
Yes

Income tax withholding

Imposes wage income tax Yes
Rate structure Flat 2.95%
Withholding certificate WH-4
Employee's Withholding Exemption and County Status Certificate
Accepts federal Form W-4 No
Convenience-of-the-employer rule No
Nonresident withholding threshold 30 days
Indiana provides a 30-day mobile-workforce safe harbor: a nonresident employee working 30 days or fewer in Indiana during the calendar year is generally exempt from Indiana adjusted gross income tax and withholding (subject to statutory conditions and exclusions for athletes/entertainers). More than 30 days triggers withholding.
Local income taxes Yes
EVERY Indiana county imposes a Local Income Tax (LIT), withheld by the employer. CRITICAL: Indiana's reciprocity agreements do NOT cover county LIT -- employers must still withhold county tax from residents of reciprocal states who have a principal place of employment in an Indiana county as of January 1. Employees expecting 30 or fewer Indiana workdays may file Form WH-4AFF to claim a county tax exemption.

Reciprocity

Indiana exempts residents of 5 states from Indiana withholding, provided the employee files WH-47 with the employer.

KentuckyMichiganOhioPennsylvaniaWisconsin
Confirmed in Indiana DOR Information Bulletin #33. Residents of Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin file Form WH-47 to be exempt from Indiana adjusted gross income tax on Indiana wages. Applies to wages only -- other Indiana-source income remains taxable. Does NOT exempt the employee from Indiana COUNTY income tax. Indiana residents working in Arizona may separately claim exemption from Arizona withholding on Arizona Form WEC.

States that exempt Indiana residents

A Indiana resident working in these states files that state's certificate and is taxed only by Indiana.

ArizonaDistrict of ColumbiaKentuckyMichiganOhioPennsylvaniaWisconsin

Unemployment insurance and paid leave

Taxable wage base 2026 $9,500
2025 base was $9,500.
New employer rate 2.5%
Experience rate range 0.5% – 7.4%
Experience-rating method reserve ratio
Employee UI contribution No
Paid family / medical leave No

Employer registration

Tax agency
Indiana Department of Revenue
UI agency
Indiana Department of Workforce Development

Sources

in.gov · in.gov · taxfoundation.org · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov

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This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.