Indiana employers report and pay withheld state and county income taxes by filing the Indiana WH-1 withholding form with the Indiana Department of Revenue (DOR). The form captures both the 2.95% state adjusted gross income tax and the applicable county income tax for each employee, and nearly all filers submit it electronically through INTIME, the DOR’s online tax portal.
Who Has to File
Any business paying wages to employees working in Indiana must withhold state and county income tax and file WH-1. That covers corporations, partnerships, sole proprietorships, and nonprofits. Under Indiana law, every employer required to withhold federal income tax must also deduct Indiana state and county taxes when wages are paid.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-3-4-8
Before you can file, you need a federal Employer Identification Number (EIN) from the IRS. With that, submit the Business Tax Application (Form BT-1) through INBiz or directly through the DOR. Registration produces your Indiana Taxpayer Identification Number (TID), which identifies your account on every WH-1 you file.2Indiana Department of Revenue. Business Tax Application Checklist
Filing Frequency and Deadlines
How often you file depends on how much you withhold. The default is monthly, with the return and payment due within 30 days after the month ends. Taxes withheld in March, for example, are due by April 30.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-3-4-8
If your average monthly withholding exceeded $1,000 during the previous calendar year, the DOR classifies you as an early filer. You still report monthly, but the return is due 20 days after the month ends rather than 30.3Indiana Department of Revenue. Filing Deadlines
If your average monthly withholding was $1,000 or less during the prior year, the DOR may let you file annually. Annual filers submit one WH-1 covering the full calendar year, due by January 31 of the following year.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-3-4-8 You must file a WH-1 for every assigned reporting period even when no wages were paid and no tax is due, unless you formally close the withholding account.
Completing the Form
The form is short; the payroll math behind it is where the work lives. Start with the business identification block: your name, address, federal EIN, and Indiana TID. Enter the tax period the return covers, matching your assigned filing frequency exactly.
Then two dollar figures do most of the work. Enter the total Indiana state tax withheld from all employees during the period. For 2026, the state adjusted gross income tax rate is 2.95%.4Indiana Department of Revenue. Rates, Fees and Penalties Enter the total county tax withheld, combining amounts across every county represented in your payroll at each county’s own rate. Add the two figures for the total remittance, then sign.
Getting County Withholding Right
County withholding is where most errors show up. All 92 Indiana counties impose an income tax, and rates run from under 1% to over 2.75%. For 2026, several counties adjusted their rates, including Carroll County at 2.4733%, Grant County at 2.75%, and Howard County at 2.35%.5Indiana Department of Revenue. Departmental Notice #1
The rate that applies is set by the employee’s Indiana county of residence as of January 1 of the tax year. If the employee lives out of state but works in Indiana, use the county of their principal place of work as of January 1. Employees are required to notify you within five days of any change in county of residence.1Indiana General Assembly. Indiana Code Title 6 Taxation 6-3-4-8 The DOR publishes Departmental Notice #1 at the start of each year with the full county rate table; keep the current version with your payroll references.5Indiana Department of Revenue. Departmental Notice #1
Filing and Paying Through INTIME
Indiana requires all businesses to file and pay withholding taxes electronically.6Indiana Department of Revenue. Business and Corporate Taxes The portal is INTIME (Indiana Tax Information Management Engine) at intime.dor.in.gov. Create an INTIME logon using your Indiana TID.7Indiana Department of Revenue. Withholding Income
Once inside, select your withholding tax account, choose the reporting period, and enter the state and county withholding amounts. INTIME walks through confirmation screens that verify totals before payment. You can pay directly through the portal, and the system produces a confirmation receipt when the transaction processes. Save it.
Employees Living in Reciprocal States
Indiana has reciprocal income tax agreements with Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. When an employee lives in one of those states and commutes into Indiana for work, you do not withhold Indiana state income tax from their wages; they report and pay state tax to their home state.8Indiana Department of Revenue. Income Tax Information Bulletin #28
Two limits are worth knowing. Reciprocity covers only state income tax, not county income tax, so you still withhold Indiana county tax for a reciprocal-state resident whose principal place of work is in an Indiana county. And if you mistakenly withhold Indiana state tax from a reciprocal-state resident, Indiana will not credit the amount back to you; the employee has to file for a refund directly.8Indiana Department of Revenue. Income Tax Information Bulletin #28
Penalties for Late Filing or Payment
The DOR’s penalties escalate based on what you failed to do:
- Failure to pay: 10% of the unpaid tax liability or $5, whichever is greater. The same penalty applies if you were required to pay electronically but used another method.
- Failure to file: 20% of the tax due if the DOR has to prepare the return on your behalf.
- Fraud: 100% of the tax due if the DOR determines the return was fraudulent or the tax intentionally evaded.
These are penalties. Interest continues to accrue on top of them for as long as the balance is unpaid.4Indiana Department of Revenue. Rates, Fees and Penalties The fastest way to slow the accrual on a late payment is to file the return through INTIME right away, even if you need a payment plan for the balance.
Year-End Reconciliation on Form WH-3
At the end of each calendar year, every employer who filed WH-1 returns must also file Form WH-3, the annual withholding reconciliation. The WH-3 ties your periodic WH-1 filings for the year to the W-2s and 1099s you issued. It is due by January 31 following the tax year, so the 2026 WH-3 is due January 31, 2027. You must file the WH-3 even if no tax was withheld during the year, unless you have formally closed the withholding account.7Indiana Department of Revenue. Withholding Income
With the WH-3, submit state copies of all W-2s, W-2Gs, and any 1099s that include Indiana state withholding. If your combined total exceeds 25 forms in a calendar year, file them electronically through INTIME or the DOR’s bulk SFTP process. Late or missing statements carry a penalty of $10 each.9Indiana Department of Revenue. Annual Withholding Reconciliation Form WH-3
Closing the Withholding Account
When you stop employing workers in Indiana or shut the business down, close the withholding account. The simplest route is INTIME: log in and request closure. Without an INTIME account, submit Form BC-100 (Indiana Tax Closure Request) by fax or mail to the DOR. Don’t send it both ways; duplicates slow processing.10Indiana Department of Revenue. Close a Business Account
If you leave the account open, the DOR keeps expecting WH-1 filings and can send bills for estimated taxes even though you have no employees. File your final WH-1 and WH-3, close the account, and keep the confirmation.