The Indiana Department of Revenue announced on August 30, 2023, that that an updated Form WH-4, Employee's Withholding Exemption and County Status Certificate, is now available for immediate use.

The following have been added to Form WH-4:

• New Line 7 for claiming a one-time $3,000 dependent child tax exemption as provided under HB 1001
• A checkbox for employees to declare that they moved or worked in another Indiana county after January 1 and wish to request a change to their county of residence or work for the next calendar year

One-time dependent child exemption

Taxpayers are eligible for a $1,500 tax exemption per year for each dependent child. However, under HB 1001, enacted on May 4, 2023, and effective retroactive to January 1, 2023, taxpayers who claim a dependent child for the first time may claim a higher one-time $3,000 exemption for the calendar year. (See Tax Alert 2023-0981 for more information.)

The $3,000 exemption is factored into the Indiana state income tax withholding calculation for the calendar year in which the exemption is claimed on Form WH-4.

Ernst & Young LLP insights

HB 1001 also gradually lowers the personal income tax rates starting in 2024 and through 2027.

Employers should consider suggesting to their Indiana employees that they review the updated Form WH-4 to determine if they are eligible for lower state income tax withholding in 2023 and if other updates are needed for 2024.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor