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February 9, 2022
2022-0233

Indiana county income tax rates increase in some jurisdictions effective January 1, 2022

The Indiana Department of Revenue has updated Department Notice #1 to show the county income tax rates that apply effective January 1, 2022, reflecting income tax increases in the following counties:

  • Cass County: 0.0295 (increased from 0.027)
  • Madison County: 0.0225 (increased from 0.0175)
  • Randolph County: 0.03 (increased from 0.025)

Employers are instructed to withhold county tax based on the employee's Indiana county of residence as of January 1 of the tax year. If employees reside outside of the state of Indiana on January 1, but their principal place of work or business is within an Indiana county as of January 1, the employer should withhold for the Indiana county of the employee's principal place of work or business.

Indiana state income tax withholding is computed at a flat rate of 3.23% of taxable wages. (Income tax withholding frequently asked questions.)

Indiana currently participates in reciprocal agreements with Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. Employees who are residents of any one of these states are exempt from Indiana state income tax withholding provided they complete Form WH-47, Certificate of Residence, and submit it to their employer. Reciprocal agreements do not affect the requirement to withhold Indiana county income taxes. (Information Bulletin #33.)

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kristie Lowery (kristie.lowery@ey.com)
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)

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