Indiana paycheck taxes at a glance
| Income tax on wages | Flat 2.95% |
|---|---|
| Minimum wage (2026) | $7.25 an hour (same as the federal minimum) |
Local taxes: All 92 Indiana counties levy a county income tax (0.5% to 3%, e.g. Marion County 2.02%).
Example: a $74,500 salary in Indiana
The median household income in Indiana is about $74,516 (2025 data). Here's what one earner with that salary, paid every two weeks, filing single with no pre-tax deductions, would see on each paycheck in 2026:
| Gross pay | $2,865.38 |
|---|---|
| Federal income tax | −$290.77 |
| Social Security | −$177.65 |
| Medicare | −$41.55 |
| Indiana income tax | −$83.39 |
| Take-home pay | $2,272.02 |
That's $59,073 a year in take-home pay, or 20.7% of gross pay going to taxes.
Take-home pay by salary in Indiana
Single filer, paid biweekly, standard W-4, no pre-tax deductions:
| Salary | Per paycheck | Per year | State taxes | Total tax rate |
|---|---|---|---|---|
| $40,000 | $1,275.75 | $33,170 | $1,151 | 17.1% |
| $60,000 | $1,871.13 | $48,650 | $1,741 | 18.9% |
| $80,000 | $2,414.60 | $62,780 | $2,331 | 21.5% |
| $100,000 | $2,933.06 | $76,260 | $2,921 | 23.7% |
| $150,000 | $4,207.52 | $109,396 | $4,396 | 27.1% |
| $200,000 | $5,502.17 | $143,057 | $5,871 | 28.5% |
What changed for 2026
- The state income tax rate is 2.95% for 2026 and is set to drop to 2.90% for 2027.
- County rates can change during the year. Boone County's rate changed in 2026, so check the current county table if you live there.
Indiana pay rules worth knowing
- Indiana requires employers to pay at least semi-monthly or biweekly.
Two income taxes on every Indiana paycheck
Indiana withholds two income taxes from almost every paycheck:
- State income tax, a flat 2.95% for 2026 after your exemptions.
- County income tax, charged by all 92 counties at rates set locally (see the local-taxes note above).
The calculator above includes the state tax. Add your county rate in the Local income tax rate field to include the county tax too. Randolph County’s 3% rate is actually higher than the state’s 2.95%, so leaving the county tax out there would miss about half of your Indiana income tax.
The exemptions you claim on Form WH-4 lower the wages your state tax is figured on. The FAQ lists the amounts.
How the January 1 rule works
Your county tax is set once a year. Employers withhold county tax based on the Indiana county you lived in on January 1. That has a few practical consequences:
- Moving mid-year doesn’t change your county rate until the following January 1, even if you move from a low-rate county to a high-rate one or the reverse.
- Tell payroll about a move before January 1. If you’ve moved, update your county of residence on your WH-4 so the new county applies from the new year.
- Nonresidents are taxed at the rate for the Indiana county where they principally worked on January 1.
Local income tax changes ahead
Indiana passed a broad rewrite of local income taxes in 2025 (Senate Enrolled Act 1). Under it:
- Counties move to a restructured county rate of up to 2.9%, built from four parts, replacing the current mix of local tax categories. The old categories are repealed effective January 1, 2028.
- Cities and towns with at least 3,500 residents can add their own income tax of up to 1.2%, for collections starting in 2028.
For 2026 paychecks, nothing changes yet. From 2028, though, your total local rate could rise if your city or town adopts the new tax.
Working across the state line
Indiana’s reciprocal agreements cover state income tax but not local taxes. In practice:
- A Kentucky resident working in Indiana usually has their home state’s tax withheld instead of Indiana’s 2.95%, but may still owe Indiana county tax as a nonresident.
- An Indiana resident working in a reciprocal state generally pays Indiana state and county tax instead of the work state’s income tax.
Hourly pay in Indiana
Indiana’s minimum wage is $7.25 an hour, the same as the federal rate. Employers that claim a tip credit can pay tipped workers $2.13 an hour in cash wages. A training wage of $4.25 an hour is allowed for workers under 20 during their first 90 consecutive days.
The salary calculator converts an hourly rate to annual pay, and the income tax calculator checks your full-year federal tax. A traditional 401(k) lowers your federal taxable wages; use the 401(k) calculator to see how it grows.
Estimates only. Your employer’s payroll system, your W-4 and WH-4 determine your actual paycheck.
Sources
- Indiana Department of Labor: Minimum Wage Poster
- U.S. Department of Labor: State Payday Requirements
- Indiana DOR: Tax rates, fees and penalties
- Indiana DOR: Information Bulletin #28 (reciprocity)
- Indiana DLGF: 2027 Local Income Tax Statute Compilation (SEA 1-2025)
- Census Bureau: Household Income in States and Metropolitan Areas, 2025
- in.gov
- IRS Publication 15-T (federal withholding)
Frequently asked questions
Which county's tax comes out of my Indiana paycheck?
The county where you lived on January 1 of the tax year. If you move to another county later in the year, your county tax doesn't change until the next January 1. If you don't live in Indiana but work here, the county where you principally worked on January 1 applies.
Do Indiana cities have their own income tax?
Not yet. Senate Enrolled Act 1 of 2025 lets cities and towns with at least 3,500 residents adopt a local income tax of up to 1.2% on top of the county rate, for collections starting in 2028. The same law restructures county rates into a single rate of up to 2.9%.
I live in Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin and work in Indiana. What do I owe?
Indiana has reciprocal agreements with those five states, so your wages aren't subject to Indiana state income tax and your employer can withhold for your home state instead. The agreements don't cover local income taxes, so Indiana county tax for the county where you work can still apply.
What exemptions can I claim on Form WH-4?
Each exemption claimed for yourself, your spouse or a dependent lowers taxable wages by $1,000 a year. Qualifying dependents add another $1,500 each, a first-time additional dependent can add $1,500 more, and each qualifying adopted child adds $3,000.
Facts verified November 6, 2026. Estimates only; your employer's payroll system and your W-4 determine your actual withholding.