Indiana Payroll Instructions

Indiana charges both state and county income taxes. See State of Indiana Departmental Notice #1, available from the Indiana Department of Revenue, for a listing of local tax rates for each county.

The state withholding rate changed for 2023. Only 4 counties changed rates this year. A few of the 92 counties are pretty much guaranteed to change every year. Also new: a $3000 annual deduction per adopted child. See note below.

NOTE: A few Indiana counties have rate percentages out to 4 decimals (e.g. Whitley is 1.6829%). Our accounting software can now handle 5 decimal places, but it's hardly worth the effort. On a $1000 weekly payroll amount, the 4th decimal place is worth 1/10 cent per tax collection, or 5 cents a year. Give or take a few cents depending on rounding.

Indiana makes payroll extremely complicated for companies doing work in multiple counties. You may need to use a large number of different wage schedules to can identify the wages earned in each county. Fortunately, in 2017 Indiana removed the separate non-resident rates for each county. Now there are half as many tax tables and tax items to deal with.

HINT: TurtleSoft provides free annual updates to our payroll software users, for US federal and Indiana tax withholding tables and formulas.

Indiana State Withholding Instructions

To enter withholding information for an employee in your Goldenseal company file, follow these steps:

  1. Open the Payroll tab on the left, and choose Employees.
  2. Locate the employee's record.
  3. Click the Payroll Setup button.
  4. 3. Enter the employee's marital status into the Marital Status field. You only need to use the Single or Married status, which is used only for federal taxes.
  5. Choose the correct Tax package for the county where the employee lives. We provide a few sample packages, but you'll need to set up new packages for the places where your employees live (see the next section).
  6. Enter the number of federal dependents into the Federal Exemptions field.
  7. Enter the number of personal exemptions, claimed on Form WH-4, in the State Exemptions field.
  8. Enter the number of dependent exemptions, claimed on Form WH-4, in the Other Exemptions field.
  9. Click OK.

Indiana County Taxes

Each Indiana county has its own tax rate, which means a huge number of Tax Tables and Tax Items.

NOTE-- We have changed the basic setup for county taxes, starting with the 2005 tax year. It is now much easier to set up for work in multiple counties, though still much more effort than other states.

You'll need to set up a Tax Package for each county tax rate for which you need to withhold. To do that, follow these steps:

  1. Open the Payroll tab on the left, open Lists, then choose Tax Packages.
  2. Click on an existing Indiana package, then click the Duplicate button.
  3. Click next to each tax that is included in this package. You will need to consider both the employee's county, and their W4 form status. Choose Old W4 for pre-2020 forms. Choose New W4 Step2- if they did not check the box in step 2 of the new form. Choose Step2+ if they did check it.
  4. Click OK.
  5. Repeat steps 2 and 3 to create more packages, or click Close to leave the setup window.

If employees are withheld at more than one county rate, follow these steps:

  1. Open the Payroll tab on the left, open Lists, and choose Wage Schedules.
  2. Click the New button (or click on an existing schedule and click the Duplicate button).
  3. Enter the appropriate county tax package in the Tax Package field.
  4. Click OK.
  5. Repeat steps 2 and 3 to create more schedules, or click Close to leave the setup window.
  6. Enter the appropriate Wage Schedule into each Labor Hours record, when you enter employee hours into Goldenseal.

Indiana State Unemployment Tax Instructions

In 2022, Indiana SUTA is charged on the first $9,500 of wages for each employee (unchanged from last year). The starting rate for a new business is 2.7%. After the first year the rate is different for each company, depending on past layoff history.

To enter your Indiana SUTA tax rate into the Goldenseal payroll software, follow these steps:

  1. Choose Payroll Setup from the Costs menu, and choose Tax Items.
  2. You'll see a list of Tax Items. Open the Indiana SUTA item HINT: If you don't see SUTA in the list, you'll need to import the Indiana payroll info first.
  3. Enter the percentage rate that you pay into the percentage field to the right of Calculation method.
  4. If the cutoff amount has changed, enter it into the dollar field to the right of First Adjustment.

Indiana Marital Status

  • Repeat steps 2 and 3 to create more packages, or click Close to leave the setup window.

    • Use the following to determine the value for the Marital Status popup menu in each Employee account:

    Adopted Child Deduction

    In 2023, Indiana added a $3000 annual deduction per adopted child, listed on line 7 of his/her Form WH-4. If that applies to you, follow these steps:

    1. Open the Payroll tab, open Lists and choose Tax Tables.
    2. You'll see a list of Tax Tables. Open the Indiana state table.
    3. For the Third Adjustment, enter $57.69 as an amount, with Per Other Exemption next to it.
    4. Click OK to save the change.
    5. Repeat steps 2 to 4 for each County tax that you collect.
    6. Open the Payroll tab and choose Employees.
    7. Find the employee account that needs the deduction.
    8. Click the Payroll Setup button, and enter the number of adopted child deductions into the Other Exemptions field.
    9. Click OK.

    WARNING: We did not add the new exemption to the download files, since some users may have innocently put a value into the Other Exemptions field. You probably should check your other employees and make sure it's set to zero for them!

    State Tax Contacts

    Website

    Official State Lawn Ornament

    Football cheerleader.