Change is a constant in the world of taxation, and Indiana is no exception. Effective October 1st, 2023, the Indiana Department of Revenue (DOR) has made significant revisions to Departmental Notice No.1, How to Compute Withholding for State and County Income Tax. These changes affect residents and non-residents working in specific Indiana counties. Continue reading to dive into the details of these changes and the income tax rate adjustments in five Indiana counties.
County Income Tax Rate Changes
One of the most impactful changes introduced by the Indiana DOR pertains to the income tax rates in certain counties. These revisions aim to balance the fiscal needs of the local governments and maintain a favorable tax environment for residents and workers. Tax rates have been changed in the following Indiana counties:
- Adams County: The income tax rate has decreased from 0.01624 to 0.016. This reduction may provide relief to taxpayers in the county.
- Clinton County: The income tax rate has increased from 0.0245 to 0.0265. This change may require residents and non-residents working or residing in Clinton County to review their tax planning strategies.
- Dearborn County: Dearborn County has also seen an increase in its income tax rate from 0.012 to 0.014.
- Henry County: The income tax rate in Henry County has increased slightly, from 0.017 to 0.018. While the change is modest, it may impact individuals in the long run.
- Vanderburgh County: The income tax rate has risen from 0.012 to 0.0125. This increase, while small, can contribute to various local initiatives aimed at improving the quality of life in the county.
New Tax Exemption For First-Time Qualifying Children
Aside from the county income tax rate changes, the Indiana DOR has introduced a noteworthy tax exemption for first-time qualifying children that went into effect on September 15th, 2023. This exemption aims to provide relief to growing families. It aligns with Indiana’s commitment to family support and financial well-being. It’s crucial for eligible families to explore the details of this exemption to ensure they can take full advantage of its benefits.
Navigating These Changes With A PEO
As October 1st, 2023, approaches, Indiana businesses need to be proactive in understanding and implementing these county income tax rates affecting residents and non-residents working within these counties. While some areas will see tax rate decreases, others will experience slight increases, which can impact your employees and your bottom line.
This is where a professional employer organization (PEO) like GMS can play a pivotal role in helping your business navigate these tax changes effectively. The following is how we can help your business:
- Expertise in tax compliance: Our experts have a deep understanding of tax regulations and can ensure that your business complies with the latest tax laws. We help you adjust your payroll and withholding processes to accommodate the changing tax rates.
- Timely updates: We stay up-to-date with regulatory changes, such as the new tax exemption for first-time qualifying children introduced early this month. Our experts ensure your business takes advantage of these exemptions, reducing your overall tax liability.
- Streamlined payroll management: With changes in tax rates, your payroll calculations may become more complex. PEOs have robust payroll systems that can handle these changes seamlessly, reducing the administrative burden on your HR and finance teams.
- Cost control: We help you effectively manage your labor costs and consider the impact of tax rate changes by providing you with valuable insights into workforce optimization and compensation strategies.
While this proactive approach will help you navigate the changes, it also enables your business to thrive in Indiana’s ever-changing business landscape. Contact us today to learn more.