Indiana makes it pretty easy for employers to handle payroll taxes. After all, there are only two to keep track of:
- Income tax
- Unemployment insurance tax
Even better, Indiana’s income tax is levied at a flat rate instead of a graduated one. So there’s less math for you and your employees to do when it comes to withholding the right amount.
Let’s find out what Indiana employers need to know about these two state payroll taxes. You’ll be withholding and remitting these taxes along with federal payroll taxes, which we won’t cover here. You can learn more about those in our guide to federal payroll forms.
Indiana State Income Tax
Indiana levies a flat income tax rate that changes from year to year. For the 2023 tax year, all Indiana residents or people who work in the Hoosier State paid a 3.15% rate on adjusted gross income.
For 2024, the rate will drop to 3.05%. As part of your onboarding process, you’ll give each new employee a Form WH-4, the State of Indiana Employee’s Withholding Exemption and County Status Certificate.
This will tell you how much to withhold from an employee’s paycheck. Keep the Form WH-4 on file for at least four years. Ask employees if they need a new one each year—for instance, if their filing status or other key information has changed.
Encourage them to read the fine print. Because according to state law, all changes that would decrease exemptions require that a new WH-4 be filed within 10 days. So if an employee has a foster child and claims that child for an exemption, they must fill out a new WH-4 within 10 days of the child leaving for another home.
As for due dates, you’ll be assigned a filing frequency after you create an account with the Indiana Taxpayer Information Management Engine, or INTIME. More on that in a moment.
Indiana Unemployment Insurance Tax
The Hoosier State collects unemployment insurance (UI) premiums from employers and deposits them in the Indiana Unemployment Benefit Trust Fund. Just like in other states, the employer rate depends on a number of factors.
The state gives established employers a rate based on:
- The number of former employees receiving benefits
- The amount of the employer’s payroll subject to unemployment insurance contributions
- Any extra (voluntary) payments into the fund
- Whether a business has been transferred to new ownership
- Past violations, if any, of state UI laws
The Department of Workforce Development uses these factors to determine an experience rating. This will determine whether you pay a premium of 0.50% (the minimum) or 9.40% (the maximum) of the taxable wage base, $9,500.
New employers won’t have an experience rating right away, so they pay a fixed rate of 2.5% in unemployment premiums. Unemployment insurance taxes are due quarterly, on the last day of the calendar month immediately after the last day of the calendar quarter.
This means that for the first quarter of the year—January, February, and March—they’re due by April 30.
You can learn the ins and outs of Indiana’s unemployment insurance tax in the state’s employer handbook for unemployment insurance.
How to Submit Your Indiana Payroll Taxes
There are two separate portals you must sign up for to pay your Indiana payroll taxes.
Let’s cover the state income taxes first. Your first step will be to sign up for INTIME, which stands for Indiana Taxpayer Information Management Engine.
INTIME allows you to sign up for a business tax account. You’ll need to gather a few pieces of information before you create your account, including:
- Your Social Security number, if you’re a sole proprietor
- The Federal Employer Identification Number (FEIN), if your business is anything but a sole proprietorship
- Business name and address
- The information for the responsible officer of the business (CEO or CFO, for example)
Once you’ve gotten that squared away, you’ll be able to sort out your due date for paying and filing withholding taxes. It’ll either be annually, quarterly, monthly, or early (20 days after the end of the filing period).
You’ll need to file a Form WH-1, Indiana Withholding Tax Voucher, with the withheld taxes. Plus, a Form WH-3, Annual Withholding Tax Form, will be due each year by January 31—the same as federal W-2s.
Now for unemployment insurance tax. To pay these premiums, create an account with the Indiana Department of Workforce Development Employer Self Service portal.
You’ll create a new user account, and from there, you can easily access everything you need to know about Indiana UI taxes. You’ll also be able to pay your taxes and file wage reports through the portal.
The Official Resources for Indiana Payroll Taxes
Check out this list of official resources if you want to dig deeper into the rules and regulations surrounding Indiana payroll taxes:
- Indiana Tax Filing Deadlines Calendar
- Unemployment Insurance Employer Handbook
- Employer Self-Service Resources
- Unemployment for Employers
- Withholding Income Tax
- Withholding Tax Forms
- Resources for Bulk Filing Your Indiana Taxes
- Tax Rates Fees and Penalties
Want Someone Else to Handle Your Indiana Payroll Taxes?
Even though Indiana only has two payroll taxes for you to worry about, manually doing both for an entire team of employees is a drag. Not only that, but the stakes are high. If you don’t pay the taxes on time or if you file them incorrectly, you’ll be slapped with a fine. Same goes if you forget to file an information return.
Assuming you have an entire business to run, you can’t spend all your time worrying about withholding the right amounts from your employees and sending payments on the right day with the correct accompanying forms.
Oh, and don’t forget, you’ve got federal taxes to keep track of, too.
That’s why we recommend letting payroll software take care of everything for you.
Here’s how most payroll software services work when it comes to taxes:
- Tell the software which states you need to pay taxes for
- Input employee information
- Watch as your payroll software automatically files and pays local, state, and federal payroll taxes for you
It’s really that easy. And the best payroll software services will make it easy for you to connect with a real person if you need help.
Yes, you’ll need to shell out money to pay for a service like this. But it’s beyond worth it. Just think of all the cash you won’t be shelling out in fees—not to mention the time you won’t be wasting calculating payroll taxes on your own.
Exhausted at the idea of researching which software service to choose? We’ve done the work for you. Check out our guide to the best payroll software services.
