How the Payroll Process Calculates Indiana County Taxes

Employees working or living in Indiana, might be subject to Indiana county taxation. Use the Calculation Cards task to specify the employee's Indiana county of residence or employment as of January 1.

These values must be up-to-date before you run the first payrolls of the calendar year.

How the County Tax Is Determined

To determine Indiana county tax eligibility, the payroll process uses this hierarchy based on the employee's residence or work county.

1. As of January 1, if the employee is living in an Indiana county that has county income tax, the person is subject to that county's resident tax rate until:

   • End of the year

   • They're no longer an Indiana resident

2. If the county where the employee lived hasn't adopted a county income tax, they're subject to the nonresident tax rate of the county in which they were employed on January 1 of the current tax year.

3. If the employee moves to, or works in, another Indiana county after January 1, their county status doesn't change until the next calendar tax year.

4. If the employee moves to, or works in, a state other than Indiana, they're no longer subject to Indiana taxes.