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Your Ultimate Guide to Indiana Payroll

Discover Indiana state payroll taxes and compliance. Learn about Unemployment Insurance, Personal Income Tax, and more.

Stefana Zaric
Written by Stefana Zaric
July 28, 2023

Key takeaways

  1. Unemployment insurance is a mandatory payroll tax in Indiana, providing financial support for eligible individuals who have involuntarily lost their jobs.
  2. The Indiana resident’s income determines personal income tax.
  3. You must pay for workers’ compensation in Indiana, even if you only have one Indiana employee.

Are you an employer with employees in Indiana? It’s important to be aware of state-specific regulations and requirements to remain compliant, and this guide serves as a basic introduction to US payroll in Indiana.

Paying unemployment insurance

Unemployment insurance (UI) is a government program that provides financial support to eligible individuals who have lost their jobs, helping them with temporary income during the period of unemployment while they actively seek new employment opportunities. 

As with other withholding federal taxes, such as Medicare and Social Security, employers are responsible for withholding and paying certain Indiana state taxes from their employee’s payroll. Combined, these taxes are called employer payroll taxes or payroll withholding.  

UI is administered by the US Department of Labor and paid by the employer. These payments can be managed through the Indiana Unemployment Insurance online portal.

For more information on paying your unemployment insurance, you can consult the Indiana Department of Workforce Development online.

Withholding personal income tax from your Indiana employee 

Personal Income Tax, also known as individual income tax or state income tax, is a tax on the income of Indiana residents. The employer is responsible for withholding the tax from the employee’s wages and paying the withheld amount to the state. 

Payment can be made through Indiana’s online portal. For added context, the Indiana Department of Revenue provides more information on paying the withheld amount. 

Paying Indiana Workers’ Compensation 

Workers' compensation is another insurance system that safeguards the well-being of employees in the event of work-related injuries or illnesses. The program ensures that workers receive essential benefits and compensation to cover medical expenses, rehabilitation costs, and a portion of their lost wages during the time they are unable to work due to job-related accidents or health conditions. 

In Indiana, it is mandatory for employers to pay for workers’ compensation, even if you only have one Indiana employee. Typically, workers’ compensation is purchased from a qualified commercial carrier in the state. More information on Indiana-qualified commercial carriers can be accessed from the Worker’s Compensation Board of Indiana.  

Whichever commercial carrier you choose, it’s important to verify that your workers’ compensation insurance complies with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

If you’re an employer in Indiana, this guide provides essential information on Indiana payroll taxes, compliance, and state requirements. While the information serves as a great starting point, there are many more compliance issues to consider. That’s why companies turn to Deel to streamline the process and ensure full compliance. 

Deel offers a comprehensive solution for managing US and international payroll. Request a demo to discover how our robust platform streamlines your US payroll processes — including unemployment insurance, workers’ compensation, and personal income tax.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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