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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Payroll management in Indiana

Indiana has a strong economy supported by industries such as manufacturing, agriculture, healthcare, and logistics. With a low cost of doing business and a relatively simple tax structure, Indiana provides a business-friendly environment. However, employers must comply with payroll regulations, including minimum wage laws, unemployment insurance taxes, and workers’ compensation requirements. Understanding these regulations ensures compliance and smooth payroll operations.

Payroll breakdown in Indiana

Employers in Indiana must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

  • Minimum wage: Indiana’s minimum wage is $7.25 per hour, aligning with the federal minimum wage.
  • Overtime rules:
    • Indiana follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
    • Indiana does not mandate daily overtime.

State income tax

  • Indiana has a flat state income tax rate of 3.15% for all employees.
  • Employers must also withhold applicable local income taxes, which vary by county.
  • Employers must withhold state income tax and remit it to the Indiana Department of Revenue.

Unemployment insurance (UI) tax

  • Employers must contribute to Indiana’s Unemployment Insurance (UI) program, managed by the Indiana Department of Workforce Development (DWD).
  • The wage base for UI tax in Indiana is $9,500.
  • UI tax rates vary based on an employer’s experience rating and range from 0.5% to 7.4%.

Workers’ compensation

  • Indiana law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

  • Employers must register for an Indiana Withholding Tax Account Number with the Indiana Department of Revenue.
  • State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
  • UI tax reports must be submitted quarterly to the Indiana Department of Workforce Development.
  • Payroll tax payments can be made electronically through INTIME, Indiana’s online tax portal.

Quick facts: Important considerations for employers

  • State minimum wage compliance: Indiana follows the federal minimum wage, and employers must comply with federal regulations.
  • Final paycheck rules:
    • If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
    • If an employee resigns, the final paycheck must be provided by the next scheduled payday.
  • New hire reporting: Employers must report new hires to the Indiana New Hire Reporting Center within 20 days.
  • Paid sick leave: Indiana does not mandate paid sick leave, but employers may voluntarily provide this benefit.
  • Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
  • Right-to-work state: Indiana is a right-to-work state, meaning employees cannot be required to join or pay dues to a labor union as a condition of employment.

Run payroll in Indiana with Remote

Managing payroll in Indiana requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.