Hiring your first employee in Indiana

What do you have to register for before your first payroll?

Indiana gives you one front door and three separate accounts behind it. INBiz is a genuine joint portal that hands your details to the Department of Revenue, the Secretary of State and the Department of Workforce Development in a single sitting, which is more than most states offer. What comes back is still separate: a Taxpayer Identification Number from Revenue for withholding and sales tax, a SUTA account number from Workforce Development for unemployment, and separate logins for filing (INTIME for tax, Uplink Employer Self Service for unemployment). Workers compensation is outside the portal entirely, because Indiana has no state fund and no registration step: you buy a policy from a private carrier and the carrier files proof of coverage with the Worker's Compensation Board.

Does Indiana require income tax withholding?

Yes. You register with the Indiana Department of Revenue, before the first payroll on which you withhold indiana tax; dor publishes no fixed number of days, and the application asks for the date tax was first withheld.

Two things surprise out-of-state employers. First, county income tax is not optional or occasional: withholding of county tax is required in all 92 counties, and the rate is set by where the employee lived on January 1 of the tax year, not by where your office is. If the employee lived outside Indiana on January 1 but their principal place of work was in an Indiana county, you withhold for that work county instead. Rates for 2026 run from 0.5 percent in Porter County to 3.0 percent in Randolph County, and the state rate on top is 2.95 percent for 2026, dropping to 2.90 percent in 2027. Second, Indiana's reciprocity with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin covers state tax only. DOR states plainly that the agreements do not cover local income taxes, so a resident of one of those five states working in Indiana still owes Indiana county tax and you still have to withhold it. There is a genuine relief valve: if you run a time and attendance system that records out-of-state work locations, you need not withhold for an employee reasonably expected to work in Indiana 30 days or less in the year, and a completed Form WH-4AFF relieves you until the 30 days are exceeded. Registration itself is free.

What unemployment insurance does Indiana charge a new employer?

A new Indiana employer pays 2.5% on the first $9,500 each employee earns, so roughly $238 per employee in the first year. A new Indiana employer pays 2.5 percent on the first $9,500 of each employee's wages, and keeps that rate for its first four calendar years because rates are set from a 36 month experience record measured to June 30. Both figures come from statute rather than an annual schedule, which is why they are safe to publish: IC 22-4-11-2(b)(2) fixes the 2.5 percent rate and IC 22-4-4-2(b) caps the taxable wage base at $9,500 for every year after 2010. New employers are also exempt from the solvency surcharge, so the rate you are quoted is the rate you pay. The liability trigger is the harshest part and catches people who expect a federal-style threshold: under IC 22-4-7-1 an ordinary business becomes an employer once it pays one dollar or more in wages for covered employment, and you must register during the first quarter in which you are liable. There is no 20 week test and no $1,500 quarterly test for a regular business, and the state's own consumer-facing Business Owner's Guide still describes those FUTA-style thresholds, which is wrong for state unemployment purposes. Two further traps: if you already owe federal unemployment tax in another state you are immediately liable in Indiana the moment you have a worker here, and once you are liable for any quarter you must file for every quarter of that year, including quarters before you started, using the Nothing to Report option. Construction employers (NAICS 23) get the lesser of 4.0 percent or the average construction rate, which was 2.50 percent for 2025; DWD had not published the 2026 construction figure on its rate page when this was collected.

Do you need workers compensation insurance in Indiana?

Yes, from your first employee. Indiana sets no headcount to reach, so there is no free window before coverage is required.

• every employer subject to IC 22-3-2 through IC 22-3-6, with no headcount trigger of any kind
• part-time, temporary and seasonal employees, from the first day of work

Indiana sets no employee count at all. IC 22-3-5-1(a) requires every employer except those the statute exempts either to buy insurance from a carrier authorised in Indiana or to satisfy the Board of its financial ability to self insure, and the Board states that coverage applies from an employee's first day of work. The exemptions are by class of worker, not by size: IC 22-3-2-9 excludes casual labourers, farm or agricultural employees, household employees, and certain part-time youth coaches for a 501(c)(3), and IC 22-3-2-2 excludes railroad employees in train service and municipal police and fire personnel in a pension fund. So one part-time office employee obliges you; one household cleaner does not. Unlike Ohio there is no state fund, so you buy an ordinary commercial policy and there is no registration step with the state. Self insurance costs $500 to apply and $250 a year to renew. Two things bite out-of-state employers specifically. The Board can demand current proof of coverage and charge $100 per day from the date of the request if you have not produced it by the tenth day. And IC 22-3-2-22(c) requires an employer with mobile or remote employees to deliver the coverage notice, including the carrier's name and phone number, electronically or in the same way it sends other employment information, so a single remote Indiana worker creates a notice duty that a break room poster does not satisfy.

How quickly must you report a new hire in Indiana?

Within 20 business days of the employee's date of hire under ic 22-4-10-8(h), though both dwd and the department of child services tell employers 20 days, so treat 20 calendar days as the safe deadline. Reports go to the Indiana Department of Workforce Development, Indiana New Hire Reporting Center.

The statute says 20 business days; the agencies' own employer guidance says 20 days without qualification, so the two do not quite agree and the conservative reading is 20 calendar days. A rehire counts as a new hire once the person has been off your payroll for 60 consecutive days. Unlike Ohio, Indiana's duty covers employees only, because the statute borrows the Internal Revenue Code definition, so independent contractors are not reported. Reports must be electronic. What is easy to miss is that the required fields grew in 2024: alongside name, address, Social Security number and first day of work you must now supply the employee's standardized occupational classification code and starting compensation, and the reporting centre also asks for job title and pay basis. Penalties are $25 per unreported employee, rising to $500 where employer and employee conspired to withhold or falsify the report. Note also that DWD's own Employer Handbook, revised 1 July 2025, still cites IC 22-4.1-4-2 for this duty; that section was repealed in 2015 and the live provision is IC 22-4-10-8.

Does Indiana have paid family leave or state disability insurance?

No. Indiana runs no state paid family leave fund and no state disability insurance, so there is no payroll deduction of that kind and no extra account to open.

Indiana runs no state disability insurance fund and no state paid family or medical leave programme, so there is no payroll deduction of that kind and no extra account to open. The Department of Revenue's withholding notice and its 2026 small business tax guide between them enumerate every tax an Indiana employer withholds or registers for, and the list is state income tax and county income tax and nothing else. If you already run payroll in a state like Minnesota, Delaware or California, do not carry the leave or disability deduction across to an Indiana employee. Indiana also has no statewide paid sick leave mandate, so accrued sick time is whatever your own policy says.

Do you need a sales tax permit in Indiana?

The permit is called a Registered Retail Merchant Certificate and it costs $25, non refundable, per place of business rather than per company. A restaurant that adds a food truck buys a second certificate for the truck. You apply on Form BT-1 through INBiz, must display a certificate at each retail location, and it is valid for two years and renews automatically at no charge. The renewal is where Indiana differs from most states in a way that matters: your certificate does not simply lapse on a date, it expires if you fall behind on filing or paying sales, use or withholding tax, and until you are reinstated you may not legally make retail sales. Wholesalers count as retail merchants and must register even if they expect every sale to be exempt. One naming trap: an RRMC is not a vendor's licence, which is a separate county clerk matter. Indiana charges no local sales tax, so the rate is a flat 7 percent statewide and you file one return. No general security deposit or bond requirement appeared on any DOR registration page that was read, so none is recorded here.

Does a marketplace like Amazon or Etsy handle the tax for you?

Indiana's marketplace facilitator law is unusually favourable to small sellers, and getting it wrong costs you money in the wrong direction. The facilitator is treated as the retail merchant for everything it facilitates, and it must count those sales toward its own $100,000 threshold. Your sales on its platform do not count toward yours. DOR's own worked example has a seller with $200,000 of marketplace sales and $50,000 on its own website, and concludes the seller need not register at all, because only the website sales are tested. The one exception is where the facilitator itself has not met the threshold, in which case the sales come back to you. If you are already registered and marketplace use has pushed your direct sales below the threshold, DOR says you may close the account. The law reaches food and beverage tax and county innkeeper's tax as well as sales tax.

If your sales drop, when can you stop collecting?

Indiana tests the current or preceding calendar year, so a year in which you pass $100,000 pulls the following year in with it: you keep collecting and filing through that next year even if sales collapse, and can only stop the year after. There is no period stated in days and no separate wind-down rule. What does not happen automatically is deregistration. Your Registered Retail Merchant Certificate stays open and the returns keep falling due until you close the account, so the correct move when you genuinely stop selling into Indiana is to close it rather than file zero returns forever. DOR's guidance on the 2024 repeal of the old 200 transaction threshold is the clearest illustration: sellers who qualified only on transaction count were told they could close their account in 2024 if they stayed under $100,000, but still had to file every 2024 return first.

Does Indiana charge a tax on revenue rather than profit?

Indiana has nothing resembling Washington's B&O, Ohio's CAT or Oregon's CAT, and it has been moving away from receipts taxes rather than toward them. The old gross income tax is long gone, and the Utility Receipts Tax and Utility Services Use Tax were both repealed effective 1 July 2022 by House Enrolled Act 1002, with 2022 the final filing year. The Department of Revenue's July 2026 business tax guide enumerates every tax a new business may owe and no general receipts tax appears on the list. What does exist, and does catch people, is a set of narrow local taxes on specific trades rather than on business generally: a county Food and Beverage tax and a County Innkeeper's Tax collected on top of sales tax by restaurants and lodging, plus excise taxes at 4 percent on short-term vehicle rental, 2.25 percent on heavy equipment rental and 2 percent on peer-to-peer vehicle sharing. If you are not in one of those trades, there is no receipts-based cost of doing business in Indiana at all.

Do you have to register your out-of-state company in Indiana?

Indiana uses one Foreign Registration Statement, State Form 56369, for every out-of-state entity type, and the current edition (R8 / 01-26) prints the paper fee as $125.00 for for-profit entities, $75.00 for nonprofit corporations and $250.00 for a foreign master LLC. Filing online through INBiz is cheaper, not dearer: the Secretary of State's own fee calculator returns $105.00 for a foreign LLC, a foreign for-profit corporation and a foreign limited partnership alike, and $40.00 for a foreign nonprofit, with a card or e-check processing fee added at checkout of at least $1 and no more than 2.15 percent. The stored figures are the paper fees printed on the current official form; deduct $20 if you file online, which is how most people file. Nothing scales with authorized shares.

One form covers LLCs, corporations, limited partnerships, LLPs and series entities, and a corporation must attach a certificate of existence from its home state issued within the last 60 days. Hiring one person in Indiana will normally put you over the line into transacting business, but selling into the state will not: DOR states in its remote seller bulletin that a remote seller generally does not need to register with the Secretary of State at all, so an out-of-state web seller can owe sales tax without owing a qualification fee. Qualifying opens no tax accounts, so withholding, unemployment and any retail merchant certificate remain separate registrations afterwards, and you must appoint an Indiana registered agent. Once qualified you also inherit Indiana's biennial business entity report, which is an ongoing obligation and not a one-time cost.

Where these figures come from

Every number on this page was read on Indiana's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.