The Indiana Department of Revenue announced that the counties of Cass, Decatur, Fulton, Gibson, Hamilton, Henry, Jefferson, Jennings, Knox and Tippecanoe changed their local withholding income tax rates effective January 1, 2020.

The changes are as follows:

• Cass — The rate increases from 2.6% to 2.7%.
• Decatur — The rate increases from 2.35% to 2.5%.
• Fulton — The rate increases from 2.38% to 2.68%.
• Gibson — The rate increases from 0.7% to 0.9%.
• Hamilton — The rate increases from 1% to 1.1%.
• Henry — The rate increases from 1.5% to 1.7%.
• Jefferson — The rate increases from 0.35% to 0.9%.
• Jennings — The rate decreases from 3.15% to 2.5%.
• Knox — The rate increases from 1% to 1.2%.
• Tippecanoe — The rate increases from 1.1% to 1.28%.

For more information, see Departmental Notice #1, How to Compute Withholding for State and County Income Tax, effective January 1, 2020.

The counties of Clay, Clinton, Dubois, Fayette, Greene, Hancock, Hendricks, Johnson, Ohio, Owen, Putnam, Sullivan, and Whitley changed their local withholding rates effective October 1, 2019. See EY Payroll Newsflash Vol. 20, #152, 9-26-2019 for more information.

State Form WH-4 required from new employees

Indiana employees are required to submit state Form WH-4 to their employer upon starting employment and if the number of exemptions decrease from what was previously reported.

An employee may file a new Form WH-4, Employee's Withholding Exemption and County Status Certificate, at any time if the number of exemptions increases. A new Form WH-4 must be filed within 10 days if the number of exemptions previously claimed decreases if: (a) the employee divorces (or legally separates from) a spouse for whom the employee has been claiming an exemption or the spouse claims him/herself on a separate Form WH-4; or (b) someone else takes over the support of a dependent the employee claims or the employee no longer provides more than one-half of the person's support for the tax year.

Local income tax rates consolidated

As we previously reported, 2015 HB 1485 required that local income taxes collected by Indiana counties be consolidated into one local income tax rate per county.

The bill also required that both residents and nonresidents living and/or working in a county pay at one local income tax rate, increasing the local taxes paid by nonresidents. (EY Payroll Newsflash Vol. 17, #230, 12-21-2016.)

For more information, see Department Notice #42.

State income tax rate decreased beginning 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 was further reduced to 3.23% for 2017 and later years. (HB 1001, PL 205, signed by the governor on May 8, 2013.)

2018 Form W-2 filing reminders

Employers reporting 25 or more 2019 Forms W-2 are required to electronically file the annual

withholding reconciliation (Form WH-3) and corresponding Forms W-2. EFW2 files are considered electronic when uploaded using the Department's INtax website or its Bulk FTP site. The deadline for filing the 2019 Forms W-2 is January 31, 2020.

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

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