Indiana's adjusted gross income tax rate for individuals is reduced to 3.23% effective January 1, 2017, down from 3.3%.

The Indiana Department of Revenue announced that six counties have changed their local withholding income tax rates effective January 1, 2017.

See recently released Departmental Notice #1 for the local income tax rates effective January 1, 2017. The local income taxes collected by Indiana counties are now combined into one local income tax rate per county.

The changes effective January 1, 2017 to local income tax rates are as follows:

— Boone — The rate increased from 0.01 to 0.015.
— Brown — The rate increased from 0.023955 to 0.025234.
— Jackson — The rate increased from 0.016 to 0.021.
— Jennings — The rate increased from 0.0175 to 0.025
— Noble — The rate increased from 0.015 to 0.0175.
— Tipton — The rate increased from 0.0198 to 0.026.

Local income tax rates consolidated

As we previously reported, HB 1485 requires that local income taxes collected by Indiana counties be consolidated into one local income tax rate per county. The bill also requires that both residents and nonresidents living and/or working in the county pay at one local income tax rate, increasing the local taxes paid by nonresidents. (Tax Alerts 2015-922, 2016-1489 and 2016-1657.)

For more information, see Department Notice #42.

State income tax rate to decrease in 2017

As we previously reported, the state individual income tax rate was reduced from 3.4% to 3.3% effective for calendar years 2015 and 2016, and is further reduced to 3.23% for 2017 and later years. (HB 1001, PL 205, signed by the governor on May 8, 2013.)

2016 Form W-2 filing reminders

Employers reporting 25 or more 2016 Forms W-2 are required to electronically file the annual withholding reconciliation (Form WH-3) and corresponding Forms W-2. The Department does not consider filings on diskette, CD, or DVD, accompanied by a paper WH-3 to be electronic filing. EFW2 files are considered electronic when uploaded using the Department's INtax website or its Bulk FTP site. The Department will not accept 3480 or 3490 cartridges.

The deadline for filing the 2016 Forms W-2 is January 31, 2017.

For more information, see the 2016 Form W-2 specifications.

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