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Six Indiana Counties Will Increase Income Tax Rates on January 1

BY: Lia Coniglio, Esq. | 12/23/20

Effective January 1, 2021, the Indiana Department of Revenue has issued a new Departmental Notice No. 1, How to Compute Withholding for State and County Income Tax. Six counties – Martin, Owen, Randolph, Shelby, Switzerland, and Union – are increasing their county income tax rates.

  • Martin County—increases to 0.025 from 0.0175
  • Owen County—increases to 0.016 from 0.014
  • Randolph County—increases to 0.025 from 0.0225
  • Shelby County—increases to 0.016 from 0.15
  • Switzerland County—increases to 0.0125 from 0.01
  • Union County—increases to 0.02 from 0.0175

All 92 of Indiana’s counties impose a county income tax on residents of the county and on nonresidents—who do not reside in another Indiana county—with a principal place of business or employment in the county. Each county has one county income tax rate (i.e., tax rates are the same for residents and nonresidents). Employers withhold state and county income taxes from employees’ wages.

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Lia Coniglio, Esq., is Managing Editor of PayState Update and Manager of State Payroll Information Resources for the APA.