How to Do Payroll in Indiana

Last reviewed: July 2026

Payroll in Indiana isn't complicated once the pieces are in place, but the order matters. Skip a registration and your first pay run stalls while you wait on an account number. Here's the sequence, start to finish.

Step 1: Get Your Federal EIN

Before anything else, apply for an Employer Identification Number through the IRS EIN application. It's free, the online application takes a few minutes, and you receive the number immediately. Every state registration below asks for it, so get it first.

Step 2: Register With State Agencies

With an EIN in hand, register your business with two Indiana agencies. Most employers can start both through INBIZ, the state's combined business registration portal:

• The Indiana Department of Revenue for a withholding tax account, used to file Form WH-1 (periodic withholding) and Form WH-3 (annual reconciliation).
• The Indiana Department of Workforce Development for an unemployment insurance (SUI) account.

From the Payroll Desk

Register before you run your first payroll, not after. State account numbers can take a week or two to arrive, and you need them on file before your first tax deposit is due.

Step 3: Collect Form WH-4 and Handle County Tax

Every new employee fills out Indiana Form WH-4, the state's withholding exemption certificate. It works alongside the federal W-4 and tells you how many exemptions to apply when you calculate withholding.

Here's the part employers moving from a single-tax state often overlook: Indiana requires county income tax withholding in addition to the state's flat rate. All 92 counties impose their own rate, based on where the employee lives on January 1 of the tax year, not where your business is located. Rates change year to year under Departmental Notice #1, so double-check your payroll software or spreadsheet is pulling the current table rather than a number from last year. If an employee moves to a different county mid-year, update their county code as soon as you're notified.

For the state portion, Indiana runs a flat income tax rate rather than tax brackets, which simplifies the math considerably once you know the current rate. Our W-4 Helper walks through both the federal and Indiana pieces so you can see how a given WH-4 translates into a paycheck.

Step 4: Set Up Your SUI Account

Once your DWD account is active, you'll be assigned an employer account number and a premium rate. New Indiana employers generally pay a standard new-employer rate for their first several years before shifting to an experience-based rate tied to their claims history. The tax applies to a set amount of each employee's wages per year, known as the taxable wage base, so there's a cap on how much SUI tax you owe per employee, per year. See our Indiana SUI Rates 2026 guide for the current rate and wage base.

SUI returns and payments are filed quarterly through DWD's employer portal. Miss a quarter and penalties stack up quickly, so put the due dates on the same calendar as your federal deposits.

Step 5: Set Your Pay Frequency and Final Pay Rules

Indiana requires employers to pay wages at least semimonthly, or biweekly if an employee asks for it. Each payday must cover a pay period that ended no more than 10 business days earlier, so you can't let payroll lag too far behind the work being paid for.

When someone leaves, Indiana doesn't set a single fixed deadline that applies to every separation the way some states do. As a practical rule, pay a departing employee everything owed by the next regularly scheduled payday, and don't hold a final check hostage over unreturned equipment or paperwork. Our Indiana Payday Laws guide covers the details, including what happens if a check bounces or arrives late.

Step 6: Build Your Deposit and Filing Calendar

Once payroll is running, three calendars need to stay in sync:

• Federal deposits: monthly or semiweekly, based on your lookback period, plus quarterly Form 941. See our Form 941 Guide if you're filing it for the first time.
• Indiana withholding: WH-1 deposits on a schedule DOR assigns based on your withholding volume, with the WH-3 annual reconciliation due by January 31.
• Indiana SUI: quarterly wage reports and payments through DWD.

A shared calendar, whether it's a spreadsheet or a feature inside your payroll software, keeps these three from colliding during a busy month.

Step 7: Year-End W-2s

By January 31, employees need their W-2s and the IRS needs its copy. Indiana's WH-3 reconciliation is due the same day, so treat late January as your payroll department's busiest stretch of the year. Reconcile every paycheck against your quarterly filings before you generate W-2s; a mismatch caught in January is a quick fix, while the same error found in an audit two years later is not.

Running Indiana payroll by hand is doable for a single employee, but the county tax lookup and the three-agency filing calendar add up fast once you have a handful of people on the books. Gusto automates the federal, state, and county withholding calculations, files WH-1, WH-3, and quarterly SUI on your behalf, and sends W-2s at year-end without extra spreadsheets. Run the numbers yourself first with our Paycheck Calculator, then decide whether the software is worth handing the filings off.

Frequently Asked Questions

What is the first step to doing payroll in Indiana?

Get a federal Employer Identification Number (EIN) from the IRS first. Every other registration, including your Indiana Department of Revenue withholding account and your DWD unemployment account, is built on top of that number.

Does Indiana have county income tax on top of state income tax?

Yes. Indiana employers withhold county income tax alongside state income tax for all 92 counties, based on where the employee lives as of January 1. County rates vary and change from year to year, so payroll software should pull the current Departmental Notice #1 rate table.

What is Indiana Form WH-4 used for?

Form WH-4 is the Indiana withholding exemption certificate. New employees complete it so you know how many exemptions to apply when calculating state and county withholding, similar to how the federal W-4 works for federal withholding.

How often do Indiana employers have to pay employees?

Indiana law requires wages to be paid at least semimonthly or biweekly if the employee requests it, covering a pay period that ends no more than 10 business days before the payday.

How soon must a new hire be reported in Indiana?

Within 20 days of the hire or rehire date. Reports go to the Indiana New Hire Reporting Center, which shares the data with child support enforcement agencies nationwide.