Indiana county income tax for employers
Indiana county income tax rates run from 0.5% in Porter County to 3.0% in Randolph County for 2026, with Marion County (Indianapolis) at 2.02% from January 1, 2026, on top of Indiana's 2.95% state rate, per Indiana Department of Revenue Departmental Notice #1 (checked October 16, 2026). The employee pays it; you withhold it with state income tax.
Every Indiana county levies one, so the only question is which county applies. The answer is fixed once a year, on January 1.
Indiana county income tax is a local income tax levied by each Indiana county and withheld by employers with state income tax, based on the employee's county of residence (or, for nonresidents, county of work) on January 1.
On this page
January 1 decides the county for the whole year
Indiana's rule turns on a single date:
- Use the county where the employee lived on January 1 of the tax year.
- If the employee lived outside Indiana on January 1, use the county of their principal place of work on January 1.
Because the test is a single date, an employee who moves from Porter County to Marion County in June keeps Porter County withholding for the rest of the year; the change takes effect the next January 1. The same goes for a new hire who moves to Indiana mid-year: their county code follows the rule as of January 1, not the move date. When you hire, ask for the county where the person lived on January 1, not just their current address.
The rates and rules
| Where | Tax | 2026 rate | Who pays | Wage base or cap | Filing | Official source |
|---|---|---|---|---|---|---|
| Indiana (statewide) | County local income tax | 0.5% (Porter County) to 3.0% (Randolph County); Marion County 2.02% (effective Jan 1 2026). State rate 2.95% for 2026 | employee | No cap | With state withholding (frequency not read today) | source |
Checked October 2026 against the official city, county or state pages linked in each row.
The county spread on a $60,000 salary
| County | County rate | County tax | Plus state 2.95% ($1,770.00) |
|---|---|---|---|
| Porter (lowest) | 0.5% | $300.00 | $2,070.00 |
| Marion (Indianapolis) | 2.02% | $1,212.00 | $2,982.00 |
| Randolph (highest) | 3.0% | $1,800.00 | $3,570.00 |
Source: Indiana Department of Revenue Departmental Notice #1, checked Oct 2026. Our arithmetic; ignores withholding exemptions, which lower both figures.
The same salary carries $1,500.00 more local tax in Randolph County than in Porter County. That gap matters if you are deciding where to open an office, because it changes take-home pay for the people you hire there. It is not an employer cost, though. Your costs are FICA, FUTA and Indiana unemployment at a 2.5% new employer rate on $9,500, which is $237.50 a year per employee; the Indiana payroll tax page has the detail and the employee cost calculator does the totals.
Where the rates come from and when they change
Departmental Notice #1 lists every county's rate. The Department of Revenue updates it each January 1, and sometimes on October 1 as well, so a rate can change in the fourth quarter. Our research did not include the full county list, only the low end, the high end and Marion County, so pull the notice itself when you load rates. The Department's withholding page returned an error when we checked, which is one more reason to work from the PDF.
Registering and filing
County tax is withheld and reported with Indiana state withholding, so a state withholding account with the Department of Revenue covers both. Unemployment registration is separate, with the Department of Workforce Development. We did not read the state withholding deposit schedule for this page, so confirm your filing frequency with the Department of Revenue when you register.
Indiana county tax mistakes
- Changing the county after a move. It feels right and it is wrong under the January 1 rule. Wait for the next tax year.
- Using the work county for Indiana residents. Residents are taxed by home county. Only people who lived out of state on January 1 are coded to their work county.
- Missing an October 1 rate change. Check the notice in October as well as January.
- Pennsylvania commuters. Pennsylvania lists Indiana among its reciprocal states for state income tax. That agreement is about state withholding. We did not verify how it affects Indiana county tax for a Pennsylvania resident who works in Indiana, so ask the Department of Revenue.
- Stale county codes in January. Every January 1 resets the test. Collect updated county information from anyone who moved last year.
What to ask a payroll provider
You need a provider that stores a January 1 county code per employee, separate from the current address, and that updates rates from Departmental Notice #1. OnPay says local tax filings are included at $49 a month plus $6 per worker (checked October 16, 2026). Compare more options in our payroll software rankings. Related reading: how payroll taxes work, SUTA rates for 2026, Maryland's county income tax, which works by residence too, and the payroll tax hub.
Frequently asked questions
What are Indiana county income tax rates for 2026?
Which county's tax do I withhold for an Indiana employee?
Does an employee's county change if they move mid-year?
What is the Marion County income tax rate?
How often do Indiana county tax rates change?
Sources (4)
- Indiana Department of Revenue: Departmental Notice #1: county income tax rates (checked Oct 16, 2026)
- Indiana Department of Workforce Development: New employer premium rate (checked Oct 16, 2026)
- Pennsylvania Department of Revenue: Employer withholding (reciprocal agreements) (checked Oct 16, 2026)
- OnPay: OnPay pricing (checked Oct 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.