Indiana pay stubs: flat state tax plus county income tax

State income tax

Indiana has a flat income tax that has been stepping down each year. For 2026 the rate is 2.95%, and it is scheduled to drop again in 2027. Employees claim exemptions on Form WH-4, which reduce the wages subject to tax before the rate is applied.

Local taxes

County income tax is what makes Indiana payroll more involved than the flat state rate suggests. All 92 Indiana counties levy a local income tax, and rates vary from county to county. The county that applies generally depends on where the employee lived on January 1 of the year. If they lived outside Indiana on that date but worked in Indiana, the county where they worked on January 1 applies instead. Employees list their counties on the WH-4.

A few practical points follow from this rule. The county for the year does not change just because an employee moves in March; it resets the following January. County rates can also be adjusted during the year, so check the Department of Revenue's current county rate notice rather than relying on an old chart.

Other state payroll deductions

Indiana has no state disability insurance and no payroll-funded paid family leave program. State unemployment insurance is paid by employers. So an Indiana pay stub normally has two state-level lines: state income tax and county income tax.

Federal withholding still applies

The federal side of an Indiana pay stub has three standard lines:

1. Federal income tax, calculated from the answers on Form W-4.
2. Social Security at 6.2%, which stops once year-to-date wages reach the annual Social Security wage base.
3. Medicare at 1.45% with no cap, plus 0.9% Additional Medicare Tax on wages over $200,000 for the year.

Creating an Indiana pay stub with PayStubNest

Start a new pay stub, pick Indiana, and enter either hours and a rate or a salary. The exact amounts on the stub depend on pay, pay frequency, W-4 choices, deductions and year-to-date totals. PayStubNest calculates all of it automatically: it works out the federal and state withholding, then keeps the year-to-date columns running across pay periods so each stub picks up where the last one left off. Previewing is free; you pay only for downloads.

Record-keeping tip

Save each employee's WH-4 and record the January 1 county on file for every year. That single date drives the county line on every stub for the year, so it is worth documenting. Current state and county rates are posted by the Indiana Department of Revenue.