Indiana payroll taxes
Every tax withheld from a Indiana paycheck or paid by the employer in 2026, with rates and wage limits.
Last verified November 2, 2026. Sources: oui.doleta.gov, taxfoundation.org, oregon.gov.
| Tax | Employee pays | Employer pays | Wage limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | $184,500 |
| Medicare | 1.45%* | 1.45% | No limit |
| FUTA | — | 0.6% | $7,000 |
| Indiana SUTA | — | 2.5% (new) | $9,500 |
| Indiana income tax | 2.95% | — | — |
*Plus 0.9% Additional Medicare Tax withheld on wages over $200,000. FUTA rate shown is net of the state credit.
State unemployment insurance
Indiana charges new employers 2.5% on the first $9,500 each employee earns in a year. After a few years, the rate is based on the employer's layoff history and ranges from 0.5% to 7.4%. New employer rates are higher for construction (NAICS 23). Wage base fixed by statute.
Register and file with the Indiana unemployment tax agency.
Income tax withholding
Indiana has a flat income tax of 2.95% on taxable income. All 92 counties levy a local income tax, ~0.5%-3.38% (e.g. Marion/Indianapolis 2.02%), based on county of residence/work on Jan 1
Frequently asked questions
- What payroll taxes do employers pay in Indiana?
- Social Security, Medicare, federal unemployment (FUTA) and Indiana unemployment insurance (SUTA).
- What is the Indiana SUTA wage base for 2026?
- $9,500 per employee.
- Does Indiana require state income tax withholding?
- Yes. Employers withhold Indiana income tax based on the employee's state withholding certificate or federal W-4.