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The Indiana Department of Revenue announced that the local income tax rates have changed for the four counties below.

Employers should withhold Indiana county income tax based on employees' Indiana county of residence as of January 1 of the tax year. If employees reside outside of Indiana on January 1 but have their principal place of work or business in an Indiana county as of January 1, the employer should withhold for the Indiana county of employees' principal place of work or business.

Special rule for Indiana nonresident employees

Under SB 419, and effective January 1, 2024, an employer is not required to withhold state or county income tax on the wages of employees who will work in Indiana for 30 days or less during the tax year.

The Indiana Department of Revenue will not impose penalties for an employer's failure to withhold nonresident income tax from compensation earned by employees for services of less than 30 days in the calendar year provided one of the following applies:

• The employer maintained and relied on a time and attendance system specifically designed to allocate employee wages for income tax purposes among all taxing jurisdictions where the employee provided services for the employer
• The employer did not maintain a time and attendance system, but instead relied on the employee's annual determination of the time the employee expected to spend performing employment duties in Indiana (the employer must not have actual knowledge of fraud on the part of the employee in making the determination and the employer and the employee must not have colluded to evade taxation in making the determination)

Employees are considered present and performing employment duties within Indiana if they perform more of their employment duties within Indiana than in any other state during a particular day. To determine where employees perform their duties, the following applies:

• Any portion of the day during which employees are in transit is not considered in determining the location of employees' performance of their employment duties
• If employees perform their employment duties in their both their state of residence and in only one nonresident state during a particular day, the employees are considered to have performed more of their employment duties in the nonresident state than in the state of residence for that day

If an individual performs substantially similar job duties for an employer during a calendar year while designated both as an employee or in a capacity other than as an employee, the number of days considered worked in Indiana must be aggregated, without regard to the individual's designation as other than an employee.