The local income tax rate in Delaware County, Indiana is 1.5 percent, effective January 1, 2026.1Indiana Department of Revenue. Departmental Notice #1 Added to Indiana’s 2.95 percent state income tax rate for 2026, the combined income tax on your Indiana adjusted gross income comes to 4.45 percent.2Indiana Department of Revenue. Rates, Fees and Penalties The Delaware County Council sets the local portion under Indiana Code 6-3.6, and it can be adjusted in January or October of any year.
Who Owes the Delaware County Rate
Your local tax obligation for the full year is fixed by where you live and work on January 1. If you are a Delaware County resident on that date, you owe the 1.5 percent rate for the entire year, even if you move away in February.3Indiana Department of Revenue. Income Tax Information Bulletin #32
When your county of residence and county of employment differ, residency controls. If you live in Delaware County but commute to a job in Madison County, you still pay Delaware County’s rate.1Indiana Department of Revenue. Departmental Notice #1
Out-of-State Workers
If you live outside Indiana on January 1 but your principal workplace is in Delaware County, you owe the full 1.5 percent rate on your Indiana-source wages. Indiana does not use a reduced nonresident rate; the same 1.5 percent applies whether you live in the county or just work there.1Indiana Department of Revenue. Departmental Notice #1
Mid-Year Moves
Moving into or out of Delaware County during the year does not change your current-year rate. Because January 1 fixes your county for the entire taxable year, a move in March 2026 would not affect your Delaware County obligation until the 2027 tax year.3Indiana Department of Revenue. Income Tax Information Bulletin #32
How the Tax Gets Paid
Through Your Paycheck
For most workers, the local tax comes out of every paycheck automatically. Your employer uses Indiana Form WH-4, the Employee’s Withholding Exemption and County Status Certificate, to identify your county of residence and county of employment as of January 1.4Indiana Department of Revenue. Withholding Tax Forms From there, the employer withholds the correct local rate alongside state tax and remits both to the Indiana Department of Revenue.
If your WH-4 on file lists a county you no longer live or work in, your withholding for the coming year will be wrong. File an updated WH-4 with your employer so withholding matches your actual January 1 county.
Estimated Payments If You’re Self-Employed
Income not subject to employer withholding gets reconciled through quarterly estimated payments. Indiana requires estimated payments when you expect to owe $1,000 or more in combined state and county tax beyond what withholding covers.5Indiana Department of Revenue. Estimated Payments The four deadlines are:
- April 15
- June 15
- September 15
- January 15 of the following year
Pay online through INTIME or mail Form ES-40 with a check. When a due date falls on a weekend or holiday, the deadline shifts to the next business day.
Filing Your Annual Return
You reconcile the local tax on the same return as your state tax. Full-year Indiana residents file Form IT-40; part-year residents and full-year nonresidents file Form IT-40PNR.6Indiana Department of Revenue. Current Year Individual Tax Forms The form calculates your Delaware County tax and compares the total state-plus-county liability against what was already withheld or paid through estimates. If withholding exceeded what you owe, the state refunds the difference. If it fell short, you pay the balance with your return.
Indiana returns for the 2025 tax year are due April 15, 2026.7Indiana Department of Revenue. Extension of Time to File You can request more time to file through INTIME or by submitting Form IT-9 before April 15. A valid federal extension gives you an Indiana extension automatically, as long as at least 90 percent of your total state and county tax has been paid by the original due date. The extended filing deadline for 2025 returns is November 16, 2026.
An extension buys time to file, not time to pay. Interest starts accruing on any unpaid balance the day after April 15, extension or not. Penalties can be avoided if you file within the extension period and your remaining balance stays under 10 percent of the total state and county tax due.8Indiana Department of Revenue. Instruction for Obtaining Extensions of Time to File Indiana Individual Income Tax Returns
What Underpayment Costs
Indiana charges 7 percent annual interest on underpaid tax for the 2026 calendar year, running from the original due date until the balance clears.9Indiana Department of Revenue. Departmental Notice #3: Interest Rates for Calendar Year 2026 The rate is reset each year based on the average investment yield on state general fund money, plus two percentage points.
Penalties sit on top of interest. Filing a return without paying the full balance, or being found deficient due to negligence, draws a 10 percent penalty on the unpaid amount. Skipping the return entirely so the Department of Revenue has to prepare one for you raises that to 20 percent. Fraud carries a 100 percent penalty. Total penalties are capped at 100 percent of what you owe, with a $5 minimum.10Justia. Indiana Code Title 6, Article 8.1, Chapter 10 – Penalties and Interest These apply to the combined state and county balance; the local portion is not treated separately or more leniently.