Indiana county income tax is a local tax every Indiana resident owes on top of the state’s flat 2.95% individual income tax, charged at a rate set by the county where you lived on January 1 of the tax year. For 2026, county rates run from 0.50% to 3.0% of your Indiana adjusted gross income, with Randolph County at the top of the range.1Indiana Department of Revenue. Departmental Notice #1 – How to Compute Withholding for State and County Income Tax You don’t file a separate county return; the tax is calculated on Schedule CT-40 and paid with your state Form IT-40.
Which County You Owe
Your county of residence for tax purposes is wherever your primary home sat on January 1. Move across county lines on January 2 and you still owe the old county for the entire tax year. The same snapshot date applies to your county of employment if you work in a different Indiana county than you live in, though your resident county rate is typically what appears on the return. Out-of-state residents who commute into Indiana pay the rate for the county where they perform most of their work.2Indiana General Assembly. Information Bulletin #32 – General Information on Local Income Taxes
Getting the county code wrong is one of the most common filing errors, and it can trigger underpayment notices, delayed refunds, or penalty assessments. If you moved during the prior year, confirm your January 1 address before you file.
Two boundaries worth knowing. Indiana’s reciprocity agreements with Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin cover state income tax only; nonresidents from those states can still owe Indiana county tax on Indiana wages.3Indiana General Assembly. Memorandum of Decision 01-20242824 And if you live in Indiana but pay a city or county tax to another state, Indiana does not give you a credit for it.4Legal Information Institute (LII). 45 IAC 3.1-1-74 – Credit for Other State Income Taxes Active-duty military members have their own rules: single service members stationed outside Indiana before January 1 owe no county tax and enter county code “00,” while members who enlisted as Indiana residents and remain stationed in-state use the county they lived in at enlistment.5Indiana Department of Revenue. Military Service Members
What the 2026 Rates Look Like
Each of Indiana’s 92 counties sets its own rate, and the spread matters. On $50,000 of Indiana adjusted gross income, the gap between the lowest 0.50% rate and Randolph County’s 3.0% is $250 versus $1,500.1Indiana Department of Revenue. Departmental Notice #1 – How to Compute Withholding for State and County Income Tax County councils can change rates, and adjustments typically take effect in January or October.6Indiana Department of Revenue. Rates, Fees and Penalties The Department of Revenue publishes the current list in Departmental Notice #1. Check it before filing, because employer withholding sometimes lags a rate change, which can leave you with a balance due at year-end.
Filing County Tax on Your State Return
There is no separate county tax form. Full-year residents file Form IT-40; part-year residents and nonresidents file Form IT-40PNR. Both require Schedule CT-40 (or CT-40PNR), which is where the county tax is actually calculated.7Indiana Department of Revenue. Current Year Individual Tax Forms The schedule pulls your Indiana adjusted gross income from line 7 of your IT-40 and applies your county rate.8Indiana Department of Revenue. Schedule CT-40 – County Tax Schedule for Full-Year Indiana Residents
To fill it out you need two things: your two-digit county code (listed in the IT-40 instruction booklet) and the current rate from Departmental Notice #1. Check your W-2 or 1099 forms for county tax already withheld during the year, since that amount offsets your liability.
The return is due April 15. If that date falls on a weekend or holiday, the deadline shifts to the next business day.9Indiana Department of Revenue. Filing Deadlines You can file electronically through INTIME or mail a paper return.10Indiana Department of Revenue. INTIME If you have a balance, pay by credit card, e-check, or money order through INTIME. File on time even if you can’t pay in full. The late-filing and late-payment penalties are separate, and stacking both costs more than either alone.
Deductions That Cut Your County Bill
County tax rides on the same Indiana adjusted gross income used for state tax, so any state-level deduction that reduces that figure shrinks your county tax base too. People miss this because they treat the two as separate.
The renter’s deduction is one of the most commonly overlooked. If you rent your primary residence in Indiana, you can deduct up to $3,000 in rent paid, or $1,500 if married filing separately, from your adjusted gross income.11Indiana General Assembly. Indiana Code 6-3-2-6 – Deduction; Rent Payments At a 2% county rate, that’s $60 off your county tax on top of the state savings. The deduction doesn’t apply if the property is exempt from Indiana property tax.
Estimated Payments if You’re Self-Employed
If you expect to owe $1,000 or more in combined state and county tax beyond what’s withheld, you have to make quarterly estimated payments.12Indiana Department of Revenue. Estimated Payments This mostly catches self-employed workers, freelancers, and people with substantial investment income, since nobody is withholding county tax on their behalf.
Multiply your taxable income (after exemptions) by your county’s rate, divide into four installments, and submit each one with Form ES-40. Your two-digit county code and the county portion of the payment go on Line 2. If your spouse owes to a different county, their code and amount go on Line 3.13Indiana Department of Revenue. Estimated Tax Payment Form (Form ES-40)
Due dates are April 15, June 15, September 15, and January 15, with the usual weekend and holiday rollover.9Indiana Department of Revenue. Filing Deadlines Missing a quarterly deadline triggers a 10% penalty on the underpayment for that period.6Indiana Department of Revenue. Rates, Fees and Penalties
Penalties if You Miss a Deadline
Indiana charges two separate penalties and they add up fast. Late filing runs $10 for every day past the due date, capped at $250. Late payment is 10% of the unpaid tax, or $5, whichever is greater.14Indiana Department of Revenue. Fines, Fees and Penalties Interest also accrues on any unpaid balance, so delay compounds the cost.
Payment Plans
If you owe more than $100 after filing, you can set up an installment agreement through INTIME. The length depends on the balance:15Indiana Department of Revenue. Payment Plans
- $100 or less: no plan available, pay in full
- $101 to $1,000: up to 12 months
- $1,001 to $5,000: up to 24 months
- $5,001 and above: up to 36 months
You can only start a plan after your return has been processed, so there’s a short waiting period after filing. Penalties and interest keep accruing while you’re on the plan, so paying ahead of schedule saves money. If a new liability comes up while you’re already on a plan, call Department of Revenue customer service to fold it in rather than letting it drift into collections.15Indiana Department of Revenue. Payment Plans
Fixing a County Tax Mistake
Wrong county code, wrong rate, or a missed deduction all affect your county tax. To correct one, file an amended return by selecting the “Amended” box on Form IT-40 and including a corrected Schedule CT-40.16Indiana Department of Revenue. Amend A Return You have three years from the original due date, or from the date the tax was paid if later, to amend.
Report estimated payments you already made on the amended return, and don’t include refunds you previously received. If the corrected numbers show you owe more, pay as soon as possible to limit additional penalties and interest. Don’t amend to fix a simple math error. The Department of Revenue catches those during processing.16Indiana Department of Revenue. Amend A Return