Indiana Hourly Paycheck and Payroll Calculator

Indiana Hourly Paycheck Calculator

Indiana is home to the Racing Capital of the World. With several annual auto racing events each year, Indianapolis attracts motorsports enthusiasts from all over the world. It also attracts small business owners due to its central location and easy highway access.

As an Indiana small business owner,  you may feel like you’re always racing against the clock to process your payroll and pay your taxes on time.
We’ll get you up to speed on all of Indiana’s payroll taxes, and cover some of the standard paycheck rules to get you to the payroll finish line with ease.

Indiana payroll taxes

Here’s what you need to know about withholding payroll taxes in Indiana.

• Indiana payroll taxes start with employees filling out Form WH-47. This information helps you determine how much you should withhold. 
• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.
• Employees need to update Form WH-47 in case of life events (such as marriage, divorce, birth or adoption of a child, etc.) which may impact their taxes.
• The personal income tax rate in Indiana is 3.15%.
• Indiana has reciprocity with the following states: Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin.

Additional Indiana forms

In addition to Form WH-47 mentioned above, Indiana employers also need to file the following forms:

1. Withholding Tax Voucher (WH-1)*
2. Annual Withholding Tax (WH-3)
3. Wage and Tax Statement (State W2)
4. New Hire Report
5. Quarterly Wage and Employment Report (UC-5A)

Indiana unemployment tax rate

Indiana requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own. 

• Employers pay Indiana unemployment tax on the first $9,500 of an employee’s wages.
• New employers pay 2.5%–4.5%. 
• Experienced employers pay at a rate of 0.5%–9.4%.
• Unemployment tax in Indiana should be paid quarterly to ESS: Employer Self Service.

Paying Indiana taxes

Here’s what you need to know about paying Indiana taxes:

• How often employers pay depends on the amount of tax you withhold in a year. 
• Indiana’s payment frequencies are: annually, monthly, or early monthly (payment required 20 days after the end of the month). 

Other Indiana taxes

Indiana employers are also required to pay or withhold the following taxes.

• For a list of counties with active tax rates in Indiana, please visit this site: How to Compute Withholding for State and County Income Tax 

Indiana minimum wage

In 2023, the minimum wage in Indiana is $7.25 per hour.

Indiana overtime pay

Because Indiana doesn’t have any state law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.

Workers’ Compensation

Requirements to obtain Workers’ Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information. 

New hires

Employers in Indiana need to report new employees.

• New hires must be reported to Indiana New Hire Reporting Center.
• New hires must be reported within 20 days of their first day of work. 

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address
2. Employee’s name and last four digits of their Social Security number
3. Pay period beginning and end dates
4. Total hours worked
5. Rate of pay
6. Gross wages
7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

• If an employee leaves voluntarily, you’re required to pay them on the company’s next regular payday.
• If an employee leaves involuntarily, you’re required to pay them within 10 days of their last day. If you’re mailing the final paycheck and you don’t have their mailing address, you have up to 10 days after they provide it to you.

Time off

Indiana law requires employers to provide the following types of time off to employees.

• Jury duty

Federal payroll taxes

In addition to Indiana-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt. 
• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt. 
• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax. 
• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $2,600. 
• The Medicare tax requires employers and employees to each contribute 1.45% of all wages. 
• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages. 
• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.
• Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly. 

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees that earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax. 
• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.
• Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.